After a short pause, the economy is yet again the topic of discussion. Depending who one talks to, one can find quite a few perspectives on Pakistan’s economy.The governor of the State Bank...
After a short pause, the economy is yet again the topic of discussion. Depending who one talks to, one can find quite a few perspectives on Pakistan’s economy.
The governor of the State Bank and the chairperson of the FBR are telling us that the economy is stabilizing which will kick start the growth cycle next year. The business community and traders are visibly upset on what they term as “non-business friendly measures” of the current economic managers.
If one talks to the general masses, hardcore followers of the PTI have not lost hope and are waiting for economic turnover to happen. Those against the PTI keep reminding of the “better days” when the PML-N was in power. Busy in putting extra efforts to earn two square meals, the majority of citizens have no time to express their opinion.
So, what is the current economic situation and are we heading in the right direction? Before answering this question, let me say that the challenges facing Pakistan are not only economic in nature. In fact, we are facing multiple challenges. For the sake of discussion, I call them the 7F challenges. In no particular order, my ‘7Fs’ are fiscal; fuel; food; fragility of climate; frontiers (situation across borders – read: security and defence); fertility (population); and functional democracy (governance). Readers are more than welcome to add a few more challenges, delete some of them, or come up with any other alphabet to describe their challenges.
My hypothesis is that these challenges are interdependent and mutually non-exclusive. In fact, they are so intertwined that it is difficult to resolve any six of them leaving behind the seventh. It is easier said than done, but the fact is that piecemeal efforts in addressing these challenges would not work until we take a holistic view of what is affecting the people of Pakistan.
The government took the fiscal crisis as a priority and one has seen many positive changes on the macroeconomic front such as significant reduction in the current account deficit, decrease in the import bill, increase in export volume, stabilization of a market-determined exchange rate, and a gradual build-up of international reserves.
There are attempts to stop further accumulation of the energy circular debt, ultimately bringing it to zero. The prime minister has given a deadline of two months for presenting feasible plans to revive the sick public-sector units and efforts are on to expand the tax net through use of technology. All of these steps are reasonably addressing our fiscal crisis.
Pakistan’s effective response to the Indian airstrikes in February; our consistent moral and diplomatic support to the cause of Kashmir; a constructive role in the Afghan peace process, and most importantly restoring physical security in Pakistan are reflections of our effective strategy in handling the crisis on the frontiers.
This leaves us to five more challenges which are either partially addressed or not effectively addressed at all. Increasing energy tariffs to reduce the energy circular debt (fuel crisis), albeit with protection of lifeline consumers, is affecting a vast segment of consumers who are lower middle or even middle-income earners. The government needs to focus on renewable and affordable alternatives sources of energy to reduce the pain of energy tariff hikes to them.
The food crisis is getting aggravated not only due to lack of public/private investment in agriculture, but due to increased cost of energy, and a fragile climate. This year, too we are expecting 15 percent shortage of water for Rabi crops. Cotton production was yet again reduced by 29 percent, which will not only affect the livelihoods of millions, but also result in an increase in the import bill for imported cotton besides reducing the supply of cottonseed-cakes, an important feed for our cattle.
Fragility of the climate (too-much or too-little water and increase in temperature) is not only affecting our agriculture, but is also increasing our vulnerabilities to natural and man-made disasters (policy led disasters). The ‘Build the dam’ campaign got damned with the retirement of the previous chief justice. The current focus is on tree plantation. However, the real challenge is not plantation, but stewardship of planted saplings, especially in arid and semiarid areas where rainwater is a major issue.
All of the above-mentioned factors are negatively affecting our ‘fertility dividend’. Without jobs, our youth bulge will turn into a major disaster for us. Hundreds and thousands of under or unemployed youth may be a non-traditional security threat for Pakistan. While the government’s efforts to gain macroeconomic stability are welcome, it should decide how to capitalize upon this stability so as to enhance economic growth.
My suggestion will be to choose any of the sector/s – either the traditional engines of growth such as agriculture, textile, real estate etc, or non-traditional engines of growth such as software, start-ups, and tourism etc. Providing an enabling policy environment to utilize the potential of chosen sector/s is a key to overcome the challenge that unemployment poses to us.
Finally, it is the people who are my seventh ‘F’ – functional democracy. People are the core of the concept of democracy. Therefore, the most direct measure of the ‘functioning’ aspect of democracy is to ask how satisfied people are with the governance system. People in Pakistan can wait till the tough measures of the current government to achieve macro-economic stability bring fruit. However, they are impatient to see an improvement in the decades-old governance model which suited the requirement of the colonial era.
While all 7Fs are mutually non-exclusive, interconnected and interdependent, one finds that attempts to turn democratic governance functional can never get the due attention of any government (including the current one). Arresting the murderer of four children in Kasur did not require additional budgetary allocation, but political will at the top and appointing the right person to do this job. If this can be replicated at a macro level, many of the miseries that the people are facing today due to the other 6Fs would automatically be reduced. It’s your call, dear prime minister.
The writer heads the SustainableDevelopment Policy Institute.