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November 25, 2020

Economy versus reality


November 25, 2020

By Farhan Bokhari

As Prime Minister Imran Khan commends his economic team over a real or imaginary upturn, Pakistan faces a downside risk where it matters the most – across average households.

In sharp contrast to the officially sanctioned logo of ‘a fast emerging economy’, the fallout from the Coronavirus and policy disconnects together have weighed down heavily on Pakistan’s mainstream population.

In recent days, a raft of improved numbers ranging from the international trade balance to the current account balance have been bandied about as evidence of a coming economic uplift.

Meanwhile, higher sales of cement and steel, just to name two items, have gone centrally in forming the official message of a construction boom in parts of Pakistan. Yet, Pakistan has witnessed similar claims in the past built upon handpicked parameters to highlight success stories.

But just as half truths are always unsustainable in the long run, the fate of today’s claims will likely end up no differently.

Following a visit to the industrial city of Faisalabad just last week, Prime Minister Khan faced live TV audience to lament the country’s failure to industrialise robustly beyond the 1960s. He then offered solace to Pakistan’s industrial and business communities, promising to return the country to its progressive yesteryears.

But Khan’s message stood apart from today’s realities given the yawning disconnect between the official claim and trends on the ground. In spite of a significant reduction in the central bank’s interest rates since beginning of 2020, Pakistan’s wealthiest business people remain unimpressed.

In the 1960s, the leading families from the community of investors stepped ahead eagerly to invest in industries, finance and businesses. If indeed a controversial NAB (National Accountability Bureau) or its equivalent body would have existed back then, the enthusiasm among businessmen then would have faded quickly.

In over two years since Prime Minister Khan stepped up to take charge of Islamabad, stories among businessmen of being targeted in NAB related investigations continue to haunt many investors.

The open ended nature of some of these probes has triggered an uninspiring message.

The body-NAB, initially set up to become the official watchdog targeting corruption at high places, has ended up becoming the attack vehicle pointed to targets including political ones. As some businessmen remain locked in long drawn NAB probes, others have been compelled to step back from expanding their stakes.

Meanwhile, the average households across Pakistan have been hit centrally by inflation surrounding prices of food commodities.

Notwithstanding the official message from the highest office, the reality on the ground presents a mix of the fallout from increasingly questionable capacity of the civil service to a continuing breakdown in agriculture.

In many ways, the matter of Pakistan’s food insecurity has become more acute today than ever in the country’s history.

A large part of this challenging reality relates to the capacity of each of Pakistan’s provinces notably the Punjab, once acknowledged as the country’s unparalleled bread basket.

The role of provinces in stabilising Pakistan’s economy has become more critical than before since the 18th Amendment to the constitution transferred central functions including agriculture from the federal government to provincial governments.

It is therefore hardly surprising that a succession of failures in agriculture since the Khan premiership began, have linked back to the shortage of capacity notably in the Punjab.

Earlier this year, the Khan government woke up very belatedly to meet the challenge posed by the rapidly widening locust attack. It was only after the appointment of well-respected minister Syed Fakhr Imam that the federal government began to take charge on this front.

Meanwhile, the cotton crop centrally failed in southern Punjab.

More significantly however, reports of the recent failure by the provincial government in Lahore to facilitate matters like a timely delivery of high quality seeds for

farmers sowing the wheat crop, has already raised doubts over harvest of this key commodity in late spring.

A year after the last food crisis triggered by overnight rise in prices of flour and sugar, the Khan-backed government in the Punjab appears to be complacency stricken.

Going forward, unless the prime minister acts prime ministerially and makes some very hard choices, the future is likely in danger of being a repeat of the past. For the moment, Prime Minister Khan continues to defend his handpicked chief minister in the Punjab, Usman Buzdar.

But that will become harder if indeed Pakistan faces fresh challenges driven by increasing food insecurity.

The economic upturn so eagerly publicised from the corridors of power in Islamabad is waiting to happen.