The wrong end?

By Farhan Bokhari

ISLAMABAD: As Prime Minister Imran Khan feels at ease with his recent political triumphs, the risks to his fledgling government seem far from abated.

This comes chiefly from the stark contrast between the official view of Pakistan’s economic trends and the much too powerful reality on the ground that continues to bring pain for ordinary households.

Briefly, the ruling structure has grabbed the wrong end of the stick as it publicly and repeatedly counts its success stories, and in the process conveniently loses sight of the heart of the matter.

More than two years after Khan burst through the barriers, posed by Pakistan’s well-entrenched two parties - the PPP and the PML-N, there is a palpable sense of disquiet across the country.

Long-term observers recall few eras in the past when mainstream households were similarly stressed by challenges to their domestic budgets. The continuing hike in prices of household utilities along with different food items, together have overstretched the budgets for the bulk of Pakistan’s population as never before.

Consequently, reviving the economy has become a formidable challenge not only for Khan’s future but more vitally for the future of Pakistan. This is especially acute given that overall economic growth when juxtaposed against Pakistan’s annual population growth, effectively remains in the negative.

In sharp contrast to this reality, there is more than just guarded euphoria among members of the ruling structure, driven chiefly by the revival of a U$6b loan from the International Monetary Fund (IMF) after a gap of several months and selective trends in some sectors.

The recent marginal improvement in the exchange rate of the Rupee versus the US dollar and improvement in Pakistan’s current account by comparison to the crisis on this front when Prime Minister Khan came to power, are today counted among the official success stories. Yet, the inflation notably surrounding prices of food commodities in itself, is a factor that will fail to reverse without comprehensive remedial action, irrespective of improving numbers in other areas.

Meanwhile, criticism of the recent autonomy to the State Bank of Pakistan has clearly exposed another gap. In an ideal democratic environment, the change to the framework surrounding the central bank should have been carried out through a parliamentary debate and an eventual vote. The apparent rush to make the change by circumventing the parliament has opened the way for future challenges to this move.

The tragedy surrounding the Pakistani people's economy today is largely anchored around the country’s rural dwellers, long ignored by the policymakers. Eventually, it’s hardly surprising that yields of key crops have routinely fallen over time, while the few incidents of near target yields of one crop after another have been short lived.

Just like his predecessors, PM Khan also promised repeatedly to lift Pakistan’s agricultural sector as never before. But so far, his words have remained just empty promises, devoid of necessary action on the ground.

If Pakistan ever succeeds in lifting its agricultural yields in a sustainable manner, that would mark a promising new era as seldom seen in recent memory. But to make this happen, it is essential to resolve a range of issues beyond just policies on paper and public statements.

Across the Punjab province ruled by Khan’s Pakistan Tehreek-e-Insaf (PTI), reports from districts speak of continued breakdown of governance in continuing trends that precede the prime minister’s maiden victory of 2018. The promise of a ‘Naya’ or new Pakistan shows little evidence of translating to the country’s rural grassroots level, notably where it matters the most.

The slide in Pakistan’s once thriving agricultural sector has been caused by factors ranging from increasingly lacklustre institutions dedicated to research on crops, to the failure to transfer new knowledge at the doorsteps of farmers. In a country which is heading towards water starvation in not too distant future, reforms in irrigation continue to be patchy at best in an added challenge to the economy.

Meanwhile, Pakistan’s ballooning bill on the import of agricultural and related commodities continues to fail in becoming recognised as evidence of a long-term criminal neglect. In an ideal environment, Pakistan must never have become a net importer of food related needs of the country. Even for commodities not grown in Pakistan like tea, other crops should have been well positioned to generate enough added revenue from exports to fund food imports.

The recent strengthening of the Rupee against the US dollar has evoked a welcome response from Pakistan’s ruling elite. Yet, this is neither factually true nor necessarily sustainable. The Rupee may have gained some ground from its exchange rate of last year, though the Pakistani currency’s exchange rate remains significantly below the rate when the prime minister came to power in 2018. More importantly, there is no guarantee that the stability of the Rupee today will remain sustainable in future.

Eventually, the prime minister and his team must reconcile themselves with two vital elements beyond official economic policies. On the one hand, the crisis of governance widely manifested in the Punjab in particular, in ways like a failure to control prices of basic commodities will continue unchecked unless it is halted aggressively. This is critical for the future of Pakistan given that the Punjab produces the bulk of Pakistan's commodities and food stocks. On the other hand, an aggressive push to improve yields of crops must take the lead in stabilising Pakistan's economic future.

Prime Minister Khan’s recent appearances on events ranging from food kitchens to low-cost housing for the poor, have received widespread publicity on Pakistan’s TV channels. But can such initiatives on their own lift Pakistan out of its economic malaise? The answer to that riddle must remain in the non-affirmative.