Our economic strategy: one step at a time

LAHORE: Pakistan, having teetered on the brink of economic collapse, has adopted a strategy akin to mending a torn fabric -- taking one stitch at a time. This approach involves selectively addressing pressing issues while deferring others, in an effort to avoid mass unrest and bide time until the system is sufficiently repaired to undertake broader reforms.

The ‘one stitch at a time’ method prioritises a few critical challenges, such as macroeconomic stabilisation. Achieving this stabilisation took nearly three years, highlighting the painful pace of recovery in a fragile economy. During this period, the government consciously avoided sweeping reforms, knowing that the austerity measures tied to stabilisation had already burdened the public. Deeper reforms, it feared, could provoke unrest.

Planners are banking on the idea that once there is some economic breathing space, more profound structural reforms will be feasible. This is a pragmatic survival strategy, shaped more by political realities than ideal economic theory. It is rooted in political feasibility: sweeping reforms often meet resistance, while gradual steps buy time and maintain social order.

The initial goal is to restore minimal stability -- strengthening foreign exchange reserves, managing debt servicing and controlling inflation to ensure basic economic functionality. The government is highlighting early wins, such as improved tax collection and export incentives, to build public confidence.

Yet the strategy has its pitfalls. Once the economy begins to stabilise, political will tends to weaken, vested interests regroup, and the urgency for reform diminishes. This is already evident in Pakistan, where each proposed reform faces stiff resistance from entrenched interests.

At some point, the state must take a firmer stance. If structural distortions -- such as tax evasion, smuggling, elite capture and energy inefficiency -- are not addressed, the recovery will remain shallow and the economy vulnerable to those same interests.

A further risk is public disillusionment. The extremely slow pace of recovery is eroding trust in the promise of future reforms, especially as inequality persists and public services fail to improve. Weak governance in Pakistan is compounding this challenge. If hard decisions are consistently deferred, the ‘one stitch at a time’ approach risks becoming ingrained as a substitute for decisive governance.

The strategy can work -- if used as part of a phased plan with clear sequencing, accountability and timelines. But if it becomes an excuse for inaction, it turns dangerous. Reform must be pursued without reversing course. Fixing a roof in the rain is difficult, but waiting for sunshine may leave the house beyond repair.

Other countries have faced similar crises. India’s 1991 balance-of-payments crisis led to bold liberalisation reforms, though the government that implemented them lost the next election. In the 2010s, Greece undertook sweeping fiscal and structural reforms under EU pressure, at a high social cost. Bangladesh adopted a more gradualist approach, consistently reforming its export sectors, female labour participation, and microfinance systems.

Pakistan, too, must stabilise swiftly -- backed by a defined reform calendar for tax policy, the power sector, state-owned enterprises and economic documentation. This requires building political consensus on what comes next to avoid policy reversals. Policymakers must engage the public through transparency and a compelling reform narrative. Only through openness and clarity can the public’s confidence -- and support -- be secured.