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June 12, 2018

One hundred days


June 12, 2018

The general elections are less than two months away. The people of Pakistan will be electing a new political leadership for another five years.

This time round, there is something in the air that reeks of political manoeuvring, defections and intrigues at a scale unprecedented in Pakistan’s political history. Mainstream political parties are not sure of what is in store for them, except for the PTI which has shown great alacrity in presenting its political manifesto in a series of public speeches by the party’s chief.

The PTI has announced its 11-point economic and political reforms agenda which is a criss-cross of political agendas known to us for decades. The reform packages, in general, contain half-truths about the reality of our existing political and economic malaise, owed to Pakistan’s position as a client state of global powers. The crass assumption of building a new Pakistan that is self-reliant, prosperous and welfare-based without a transformative economic programme is like making an omelette without breaking the egg.

What can be construed from the party leadership’s discussions on national media is that the PTI is inclined to promote private-sector investments as the primary means to achieve its development agenda. This means that under the reform package Pakistan will be opening up its economy to allow free flow of capital and products. As in the past, this will result in us losing the competitive edge over the national industrial base. Pakistan has already lost its comparative advantage in textile to countries like Bangladesh and Thailand due to its blind pursuit of the trade liberalisation policy.

The International Monetary Fund (IMF) has predicted that Pakistan’s growth will average 4.7 percent in fiscal 2019, from 5.6 percent in 2018. The IMF notes that “an increase in macroeconomic vulnerabilities and domestic policy slippages have weakened Pakistan’s economic outlook, with growth now projected to moderate to 4.7 percent in FY2019”.

Pakistan’s external debt and liabilities have increased 7.6 percent to 10.6 trillion rupees ($92 billion) since June 2013. This constitutes the total volume of liabilities up to 31 percent of GDP – the highest in almost six years. With all drastic reforms in place, Pakistan’s debt will continue to grow as it will have the highest financing need as a percentage of GDP in emerging markets over the next two years. The currency will have to be devalued further to help repay debts and keep the economy going. This will lead to the need of another IFM loan, and the vicious cycle of dependence will continue to haunt the economy for at least 10 years before Pakistan achieves moderate growth to create sizable jobs.

Reforms in the governance structure must primarily be focused on strengthening democratic institutions, investing in human development and linking the macro with the micro through locally devised development solutions. Growth of an unbridled private-sector would mean exclusion of the 60 percent youth of the country, because they neither have skills nor basic education to benefit from a market-led growth. The leading economies of the world took off with the protectionist model to first create a competitive industrial base and secure a tenable job market for its young population.

Political analyst Sartaj Khan says that, “The PTI rides on the political bandwagon that stems from the popular perception of the party being the representative of the youth, which constitutes 63 percent of the total population of the country. With no in-depth socioeconomic and political analysis of national and global economic realities, the PTI tends to offer fanciful shortcuts to address the complexities of the realpolitik”. This political rhetoric can bring about substantial gains for the PTI if it positions itself with perseverance as a change-maker. This means that there is a need for intra-party restructuring, to dispel the image of what the political opponents of the PTI see as a cult of Khan’s young worshippers.

The party is not making an unusual political claim, because when it comes to relying on the private-sector as a means of generating employment, what is then wrong with going with the one who is a bigger proponent of this ideology? Of course, the PML-N is well-poised to exploit this political narrative of development. If it is about the subaltern classes reaping trickle-down dividends of a top-down economic growth, then the PPP is the ideal candidate for electoral gains. I wonder where the PTI stands in terms of articulating its political niche in contradistinction to other mainstream parties. Apparently, the PTI seems to attract young people more than any other party, but it is doubtful that the party will be able to attract the youth with a wishful slogan of 10 million jobs only.

In this context, the PTI’s 100-day plan looks more like an extract from a management book on leadership, which makes sense only if we decide to move out of the global economic and political system. You can create 10 million jobs in five years at the displeasure of the IMF and World Bank through protectionist policies. Small enterprises work only if they are protected against the inflow of cheap products from China and other countries. Around 7 percent of GDP is consumed by climate-induced disasters, which are likely to increase given our increasing reliance on coal and rapid deforestation in the country.

Imran Khan and his core team must also be able to formulate an independent foreign policy that is not primarily driven by security concerns but also reflects a strong political will to attract investments and technology. The policy must not be founded on neoliberal unilateralism, instead should position the country as a partner in technology and economic gains. The PTI may have the vision to transform the country into a developed Asian economy but this will need going deeper with a well-defined economic roadmap and political strategy of transition. This will require at least 10 years.

A transition entails improving political governance, retiring the internal and external financial liabilities, investing in cheaper and renewable energy, improving physical infrastructure, investing 10 percent of GDP in education and skill-development, improving food security and building water reservoirs to help achieve sustainable growth. If all of this happens, the country will be able to achieve a moderate home grown economic growth to create 10 million jobs in 15 years.

This means that the real challenge is not only providing employment, but also increasing enrolment in the education and health sectors by four times, to reach the competitive level by 2030. It is also about imparting the requisite skills to ensure that 1.5 million of the youth is employed gainfully. For all this to happen, Pakistan will need to grow at a pace of 7.5 percent for at least two decades, and must be able to retire its outstanding liabilities that make up 13 percent of GDP.

The PTI’s electoral sloganeering stems from the fact that young people constitute 44 percent of the total registered voters in the country, which in turn will have a significant impact on the election results. The party has also claimed to build five million houses in five years with the private-sector’s engagement. But this requires Rs10 trillion, while the total credit to the entire private-sector is Rs5 trillion, with 13 percent growth – the highest of all sectors in Pakistan.

Institutional, economic and political reforms are overdue in Pakistan. But for them to happen, we must know that there has to be a strategy and action plan developed through a consultative process. Action plans must be SMART, ie Sustainable, Measurable, Attainable, Realistic and Time-bound. Hopefully, this is what is meant by an action plan of five years by the PTI and other reformist parties in the country.

The writer is a freelance columnist based in Islamabad.

Email: [email protected]

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