Money Matters

Putting house in order

Money Matters
By Zeeshan Haider
Mon, 04, 21

The fuss over who would lead the economic team and whether Pakistan should resume trade ties with India has exposed the poor thought process and decision-making under the present government.

The fuss over who would lead the economic team and whether Pakistan should resume trade ties with India has exposed the poor thought process and decision-making under the present government.

One wonders if this trend continued in the remaining period of this government’s tenure where it would be able to tackle the enormous challenges faced by the country’s economy or not.

The government abruptly sacked Abdul Hafeez Shaikh as finance minister just weeks after Prime Minister Imran Khan vigorously campaigned for his election as a senator to secure the finance ministry’s top slot for him.

Even after he lost election to the opposition’s candidate Yusuf Raza Gilani, the prime minister reposed full confidence in Shaikh, but then all of a sudden he was stripped of that trust for what is described as his failure to check the unabated rise in inflation.

Shaikh was replaced by Industries Minister Hammad Azhar with hopes that the “young and energetic” minister from Lahore would stem the rising tide of inflation through a vigorous approach.

Just a day after taking charge of the ministry, the enthusiastic minister chaired the meeting of the Economic Coordination Council which allowed private sector to import sugar and cotton from neighbouring India. The decision was taken to overcome the shortage of the sweetener as well as to counter the impact of reduced in cotton production in Pakistan.

All this was seen as a sign of a thaw in relations between the two estranged neighbours in the wake of the revival of 2003 ceasefire pact agreed by their military commanders in February.

But less than 24 hours later, the ECC decision was not only reversed but a message was also discreetly conveyed to the minister that either his new assignment is temporary or he would have his powers clipped if he stayed on this job.

The announcement about the new de facto finance minister came from the candidate – Shaukat Tareen – himself that he has been offered to be convener for the Economic Advisory Council to be set up under the leadership of the prime minister and that he could take over as PM’s advisor on finance provided he was cleared of a NAB case.

Such haphazard decision-making does not augur well as it sends wrong signals to the country’s business community as well as international institutions dealing with the government.

The government and the International Monetary Fund (IMF) have just agreed to revive the $6 billion loan programme which has been suspended for over a year due to the Covid-19 pandemic.

Under the new terms, the government has to take measures to ensure autonomy for the State Bank of Pakistan, raise the power tariff to control the huge circular debt and remove tax exemptions. But the proposed measures drew backlash from opposition as they would further push inflation up.

Such a situation is untenable for the government which is already facing public anger over the high inflation.

Hafeez Shaikh seemed to have been made a scapegoat in this scenario and a new economic team is now being put in place to tackle the situation.

The new finance minister as well as the new economic czar being brought in have hinted that the government might push for renegotiation with the IMF to soften the new terms.

There is no harm in renegotiating the terms of the deal with the IMF, but the way the present government has handled the economic matters since its inception are raising doubts about whether these will be tackled prudently in future.

All those handling the economy of the country, including the prime minister, have been painting a rosy picture, and conveniently overlooking the deep malaise afflicting the economy.

Pakistan does not need fire-fighting approach in tackling the economy. It needs a well-thought strategy to handle the economy, which requires the government to take a set of painful and difficult decisions.

Such a strategy could only be successful if the people of the country are taken into full confidence. Moreover, it also needs political stability in the country to ensure success of that strategy.

At a time when government and opposition are virtually not on talking terms and the latter is hell-bent on sending the government packing, evolving such a plan of action is next to impossible.

The government ministers are inviting the opposition for talks on the electoral reforms. They need to also engage the opposition to draw up an economic strategy to pull the country out of the economic quagmire.

The former finance minister Ishaq Dar had once tossed the idea that the government and the opposition should draw up a charter of economy on the pattern of charter of democracy signed by former prime ministers Benazir Bhutto and Nawaz Sharif.

Presently, there are no chances of such a deal between the government and opposition, but they could use the parliamentary form to ensure smooth passage of critical legislation on economic issues.

Pakistan has lagged behind in economic progress compared to all South Asian peers.

The economic data of Bangladesh released on the golden jubilee of its independence celebrations should serve as an eye-opener for the Pakistani leadership.

From per capita income to foreign exchange reserves and from exports to health sector, Bangladesh is way ahead of Pakistan in every sphere.

A country which has been notorious in the world for its poverty, political instability, coups, food shortages, floods and cyclones and deaths is now being predicted to join the league of developed nations in the next 15 to 20 years.

It needs deep introspection by Pakistanis as well as their leaders to understand the reasons why a country which shared 23 years of history with them leapt ahead in all sectors and spheres of life.

The government needs to first put its own house in order and shun the growing impression that it is acting in paranoia. It should strengthen its decision-taking process which requires close coordination among all levers of the government on key issues concerning the country. It should keep in mind that success of its economic strategy is largely dependent on political stability in the country and it needs to take steps to address this issue on priority.

The writer is a senior journalist based in Islamabad