A ‘bubble’ economy - Comment

ISLAMABAD: Prime minister Imran Khan is clearly determined to present hope for a coming economic revival as the latest trends surrounding the Coronavirus create room for guarded optimism.

Encouraged by early signs of a reduction of new cases of the worst pandemic to hit the world in recent times, Khan has redoubled his campaign to pursue matters like creating new business districts and sizeable urban developments.The focus of such initiatives in central Punjab is easily understandable. Its here that the ruling Pakistan Tehreek-e-Insaf (PTI) will go head to head against the opposition Pakistan Muslim League–Nawaz (PML-N) in Pakistan’s next electoral battle. And its set to be a potentially ugly and fierce round as the PTI struggles to regain lost ground while the PML-N seeks to turn the popular disappointment with the ruling structure to its political advantage.

Though elections lie over the distant horizon, the performance of Pakistan’s lackluster economy has already caused a very visible dent in PTI’s popularity. Across Pakistan, the popular lament around daily life ranges over uncontrolled inflation to continued paucity of essential basic services such as quality government education and improved healthcare. Together, such laments underline the popular disappointment with the PTI, just two years after the ruling party’s maiden victory to form the government in Islamabad. But given today’s unusual era, emerging out of the Coronavirus storm remains an uphill task for any country around the world, notably cash starved Pakistan caught under the twin weights of a tough IMF programme and weak economic growth.

To turn the tide, Khan’s choice of the way forward appears questionable. Just last week, the prime minister’s hand picked chief minister of the Punjab, Usman Buzdar, oversaw the creation of a new authority for the creation of a new city just north of Lahore.

Studded with plans for neat roads and orderly neighborhoods, the plan reportedly includes proposed landmarks such as an artificial lake-an irony in an increasingly water deficient country. Other parts of the virtual ‘Bubble’ include matters like neatly planned business parks and of course a string of new national parks to lift Pakistan out of its deepening environmental crisis. Judging from past experience under successive governments, it is hard to know exactly how far these plans will either succeed and/ or make a difference to daily lives.

However, like all ‘Bubbles’, the Pakistani Bubble lives with the danger of being punctured as long as other fundamental elements of the economy remain in disrepair. These chiefly range from matters like a chronic failure to finally reform one of the world’s worst performing tax collection systems, to the systematic expansion of consumption for the relatively few. Consequently, Pakistan lives with the continuing stress from an ever growing national debt alongside significant international trade and current account deficits. It’s hardly surprising that one of the worst outcomes from economic trends over time has been a large slide of the rupee, left inferior in value to many other developing countries including Pakistan’s peers in south Asia and south west Asia.

In sharp contrast to the pursuit of well-presented fancy new projects, Pakistan can secure its destiny with a focus on a repeatedly ignored sector – the country’s long neglected farms across its rural heartland. In the past year, the Khan government belatedly woke up to the fast mounting reality of a coming locust attack, in one of the worst errors of judgement in Pakistan’s history.

It was only after the appointment of the widely respected Syed Fakhar Imam as minister of national food security in April this year, that the wheels of the government’s agricultural machinery finally began to move. But beyond a delayed emergency response to the incoming locust invasion, the agriculture sector is in need of focus, resources and above all a long-term commitment.

In sharp contrast to undertakings like fancy housing projects with complicated aspects like assured financing, the returns from agriculture are possible in the short term. If undertaken with the right mix of policies, Pakistan’s rising commodity production can help steer the country out of its multi-faceted economic crises.

In the past year, shortages of sugar and flour together amply demonstrated the dangerous outcome for national stability from otherwise avoidable commodity shortages. It’s a choice which may not appeal to Khan as he faces mounting criticism for his government’s failure to perform, and pressure to deliver hope for a visible future. But choosing fanciful projects will hardly make much difference to the public’s mood at a critical time in the nation’s history.

In contrast, revitalising Pakistan’s agricultural sector carries the possibility of not just securing the economy’s outlook in the short to medium term. More vitally, it may also lay the basis for steering Pakistan away from some of the proverbial ‘white elephants’ of the future - a possibly large liability for times to come.