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October 17, 2019

Stark message


October 17, 2019

With the economic slowdown in the country set to continue into 2020, the message from the government could not be clearer when Minister for Science and Technology Fawad Chaudhry declared that the public should not look to the government for jobs. Instead, he ended up raising alarm bells by declaring that the government is in the process of shutting down 400 departments, which is likely to translate into the administration cutting thousands of jobs, rather than adding to them. While it might be true that jobs are usually provided by the private sector and the role of the government is to create a ‘conducive environment’, this is exactly what the government has been unable to do till now. The IMF has said that economic growth will slow down further to 2.4 percent of the GDP in the current year, which also means that jobs are likely to be in scant supply. Already, a recent survey has revealed that one in three people in the country knows someone who has lost a job recently. While there is need for more concrete data to be collected on this front, it is clear that government policies are going in the wrong direction. With inflation on the rise, it is clear that job security could be the only thing that could keep the public from pouring their anger out on the streets.

We may be entering a bold new world of small government in Pakistan, but the reality is that state interference in the economy remains extremely high. It is government policies themselves that are responsible for the economy shrinking, which has shown up the false promise of creating ten million jobs in five years. The IMF remains positive, and has spoken about the benefits of fiscal adjustment coming to the country after one more poor year.

One must wonder how the IMF policies will work in Pakistan, considering their rather poor record elsewhere. For now, the IMF does expect more challenges, especially on the oil front, but wants the government to remain committed to its policies. We appear far from an optimistic story for now. There are indications that global growth is set to shrink in the coming year, so the prospects for increasing exports look low as well. One can hope and wish that things will get better in Pakistan, but the latest message from the government does little to increase confidence.

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