An uncertain future

June 25,2019

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Prior to the 2018 elections, the PTI promised heaven-like conditions and a bright future for when it came into power. It is close to a year now since the party assumed power, and the promise is fast turning into prospects of hell.

While a few difficult decisions have been taken, for the most part the prospect of a bright future is fast vaporizing because of naiveté, indecision, bad appointments and misplaced priorities and arrogance which usually are a hallmark of the incompetent. No one doubts the PM’s intentions and passion for change, but he has surrounded himself with those who are making him do and say things that are outlandish.

The year started with the PM’s very inspiring speech from the heart. The whole nation, except for the Sharif and Zardari families and their hard-core sycophants, felt a great sense of exuberance and optimism . But since then, it has been one disappointment after another.

The first disappointment was the most uninspiring federal cabinet; the few new faces are mostly inexperienced jiyalas. On top of that, the number of cabinet ministers and special assistants is one of the largest in Pakistan’s history. This was hardly the A team that Khan said he would put in place once in power. At best it is mostly a C grade group, with near-zero achievements in their past stints as ministers . Even more disappointing and bewildering is the appointment of the CM of Punjab.

Then came two laughable pronouncements. First, the call to overseas Pakistanis to send $1000 for the Basha Dam. As any sensible person would predict, the response was pathetic. This was followed by the premature and outlandish announcement of Pakistan striking it rich because of huge offshore oil find. These announcements made a huge dent in the PM’s credibility.

The PM and his close jiyalas made tall claims of bringing billions of dollars of looted wealth back to the country and foreign investors rushing to Pakistan. The outcome so far has been most disappointing. Those who were more grounded in reality, and studied the history of the return of overseas wealth of corrupt rulers like Marcos and Abacha knew that such claims were highly exaggerated.

Misplaced accountability has also severely dampened bureaucratic decision making and economic activity. The desire for a corruption-free society is laudable, but a naïve pipedream. The PM’s star countries, China and Malaysia, had decades (and continue to have) of mind-boggling corruption at high places. India and Bangladesh have high corruption, but they have grown at twice the pace as Pakistan. While going full throttle on a few dozen corrupt politicians and bureaucrats for past wrongdoing, the government must have a more forward-looking and nuanced approach to accountability, focusing on reducing corruption in the future: by strengthening rules and processes related to decision-making and procurement, and professionalizing NAB.

The recent establishment of a debt commission is bizarre. For sure, Pakistan has a debt issue. But presenting excessive debt as a result of corruption reflects a flawed understanding of public finance. The sensible way forward would have been to first establish two committees – one comprising fiscal and development economists who should be tasked to recommend the strengthening of FRDL law to avoid future debt increases, and to review 150-200 of the largest projects to evaluate if there were any projects which were politically motivated and not justified.

The second committee would comprise procurement experts to review all large procurement (say over Rs1 billion) to examine if procurement rules were flagrantly violated. Once these two committees identified egregious cases of wrongdoing, which would take at least 12 months of painstaking work, then the commission established by the government should identify people responsible for the wrongdoing.

The proposed National Development Council is equally bewildering when there are constitutional bodies like NEC and CCI.

On the economic front, business confidence is at its lowest. There have been a few good decisions on energy pricing, and of late the exchange rate front, but precious 10 months have been wasted by the ill-prepared economic team. The government’s dithering on the IMF programme has cost this country hugely. Also, the nonstop banter by ministers on blaming past governments, rather than getting on with addressing the key challenges, is now clearly looking like a desperate attempt to cover up the government’s inaction.

Getting the economy and exports going should be the PM’s highest priority. For the next 12 months, this should be his sole focus – if the economy and exports don’t grow, all other reforms will fail. Hopefully, with the appointment of the new economic team, comprising Hafeez Shaikh, Raza Baqir, and Shabbar Zaidi, economic management in the future would be better. But they have an uphill battle to deliver ‘good times’, because of the toxic environment created by the government, and because of the recently agreed IMF programme. The programme is flawed and will surely lead to many years of low growth, high unemployment, and increase in poverty. Without experienced world-class teams at key positions in the federal and provincial governments, and 24/7 attention of the PM, the promise of a bright future – post the IMF programme – will remain elusive

The government’s focus on going after non-filers is laudable. For the success of this initiative and other actions to raise taxes, while ensuring that the high growth informal economy doesn’t get stifled, the FBR’s culture and business processes need to be changed, and internal/external oversight strengthened to sanction staff who send frivolous tax demand to meet targets or for extortion. The FBR needs to treat current and future taxpayers like customers and not criminals, and use the carrot approach in the first 18-24 months. A sensible customer-friendly policy, like the one where non-filers were recently informed of data available with the FBR, would encourage voluntary tax compliance and should be pursued vigorously. Thereafter, the stick approach would be warranted for the hardcore tax evaders.

Despite a disappointing start, the PTI can still become the party of change. Otherwise, Pakistan will continue to slide and at the time of the next elections the voters will be faced with two extreme choices – corrupt leaders with some runs on the board or incompetent and clean leaders with no runs on the board. For the PTI to deliver on its promises, it would require the PM to: provide better leadership, concentrate on the economy, desist from ill-conceived initiatives, put in place an A-class team, focus on a few areas, cut back on container banter and take a less combative approach to governing.

The PM needs to take along the 70 percent who didn’t vote for his party, without whose support all efforts at fundamental reforms will fail.

The writer is a former adviser to the World Bank.


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