Hardly a single day passes when we get reminded that all is not well with our economy.
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Hardly a single day passes when we get reminded that all is not well with our economy.
The Pakistan Muslim League-Nawaz (PML-N) ministers have been touting the high growth – expected to be six percent in this fiscal year - as one of the major achievements of this government which is nearing the end of its five-year tenure. But now it is feared that it may go in the reverse direction in the coming years in view of the burgeoning current account deficit and rising debt repayments.
This wake-up call came from none other than the International Monetary Fund (IMF) which a few years ago was all praise for the economic policies of the government.
In its latest World Economic Outlook, the international lender expected Pakistan’s economy to expand by 5.6 percent in the current fiscal year, but predicted it might sink 4.7 percent in the next financial year.
Many analysts believe that the IMF has essentially been turned into a political institution which after lending money to a government would lavishly praise its economic policies but would conveniently ignore weak aspects of those policies until the lending programme ends.
However, the main responsibility rests on the government in power to judiciously analyse the potential dangers and challenges confronted by the country and draw up a strategy that should adequately address those challenges.
Analysts say that the next few months are very crucial for the economy of the country and it needs very critical and right decisions to be taken to salvage Pakistan from another economic downturn.
With general elections just a few months away, economic experts fear that the political parties in all likelihood would focus on only politics and would prefer putting the economic challenges on the backburner, leaving the government elected after the elections to deal with these challenges.
Amidst rising political temperatures, the PML-N government is presenting the last budget of its tenure on April 27, hardly a month before it completes its term.
Though rumours are abound that the term of the caretaker government, which constitutionally is supposed to hold an election within 60 days if assemblies are dissolved after completion of their full tenure, could be extended through a judicial verdict to allow it to take crucial decisions with regard to the economy.
However, Chief Justice Saqib Nisar has ruled out the possibility of an imposition of emergency rule or financial emergency or judicial martial law as propounded by some politicians to delay the general elections.
There is complete consensus among the political parties that the elections should be held on time and they should not be put off under any excuse.
Unfortunately, our political parties are engaged just in political point-scoring and it seems that none of them have given any serious consideration to draw up a line of action to deal with these challenges.
Political uncertainty and inconsistency in the economic policies are two major factors which could exacerbate the economic downward.
Despite repeated assurances by the chief justice and army chief and complete consensus among the political parties that elections should be held on time, rumour-mongers take no break in disseminating confusion with regard to the general elections.
Such a situation creates political uncertainty in the country which scares private investors, particularly foreigners from putting their money in the economy.
Consistency in the economic policies is also vital for an economy to grow. The present government initially took the right steps to salvage Pakistan’s economy from an imminent disaster, but after achieving economic stabilisation it failed to take the required measures to consolidate those gains.
There have been persistent calls from the business community as well as from the economic experts that the exports of the country were continuously declining and it would ultimately bring foreign exchange reserves under pressure.
The economic team led by former finance minister Ishaq Dar strongly resisted calls for the devaluation of the rupee to make exports competitive, and instead relied heavily on giving hefty monetary packages to boost the dwindling exports.
Even Shahid Khaqan Abbasi after becoming prime minister to replace Nawaz Sharif initially opposed moves for devaluation, but changed his mind after Dar bowed out allowing Miftah Ismail to take over as de facto finance minister.
The exports have shown some increase over the past two months but there is still a long way to go to cause a considerable raise in exports.
Some observers believe that the caretaker government might be compelled to take some unpopular decision like further depreciation of rupee in a bid to boost exports, but that might lead to an increase in inflation.
Since an unelected government has no political stake, many believe that it would not hesitate to take such a decision if it is inevitable.
The government and opposition have yet to finalise their candidate for the slot of prime minister, former government of the State Bank of Pakistan Dr Ishrat Hussain is one of the favourites.
Pakistan Tehreek-e-Insaaf has already shown its readiness to accept Hussain as the caretaker prime minister though it has yet to formally communicate his name to the opposition leader in the National Assembly Syed Khursheed Shah who has to finalise the name in consultation with Prime Minister Abbasi.
Hussain’s name was also considered for the same post in 2013 but his name is more hotly discussed in the concerned circles in view of the precarious state of the economy.
Hussain was the key member of the economic team that was credited for turning around the country’s frail economy after General Pervez Musharraf’s coup in 1999.
But analysts caution that caretaker government has a very restricted mandate and it might leave it to the elected government formed after elections to take major decisions like negotiating a bailout package with the IMF to avert an impending balance of payment crisis.
It is time for the major political parties as well as mainstream media to initiate a national debate to evolve a discourse on how to deal with the economic challenges of the country.
The people of Pakistan need to be told what are the major challenges faced by the economy. Such a move would not only raise public awareness but would also mentally prepare the people for any difficult measures to be taken to fix these problems.
There are no quick fixes to these challenges. Some painful decisions, like reforms in taxation and energy sectors, which have long been ignored for fear of political backlash have to be taken to take the country out of the existing difficult situation.
The present government failed to show the political will to undertake these reforms despite having comfortable majority in the parliament.
Amidst predictions of a hung parliament springing up after the election, one wonders if a weak coalition would be to take such bold steps.
The writer is a senior journalist based in Islamabad
