Wednesday January 26, 2022

Pakistan’s economic puzzle?

December 01, 2021

Pakistan’s ruling elite have embarked on a mission to downplay glaring gaps in the country’s economic outlook only at the cost of further aggravating the government’s already tarnished credentials.

That being the case, finance adviser Shaukat Tarin’s recent claim of a reduction in poverty while Pakistan battles galloping inflation exactly fits in this sorry pattern. His statement followed the controversy unleashed by State Bank Governor Reza Baqir when he reassured expatriate Pakistanis of the gains they must prepared to reap from a weaker rupee in exchange for their remittances from overseas.

Together, the two top economic decision-makers are either out of sync with Pakistan’s grassroots realities or simply don’t want to embrace an all too vital reality check. The gap between the reality on the ground versus the view from the power corridors strikes right at the heart of Pakistan’s biggest challenge – the unresolved puzzle of its economic outlook.

As Prime Minister Khan lays the course for his government in the run up to the 2023 parliamentary elections, he must grapple with Pakistan’s sliding economic outlook to revive his sagging credentials. Notwithstanding the chorus of ‘sub achha’ or all is well from the likes of Tarin and Baqir, the reality across Pakistan is challenging at best and potentially dismal at worst. The popular outcry surrounding neighborhood after neighborhood speaks of unbridled inflation, especially surrounding food items of daily use.

The food-related reality has emerged from the Khan government’s failure to either tackle the variety of administrative challenges that have contributed to this outcome or revamp the long neglected agriculture sector. For a country like Pakistan, opportunities for reviving agriculture are plenty, though a hard journey must begin to head for a qualitatively better future.

Other key areas in need of reform to benefit the economy include a series of long overdue institutional reforms. For years, Pakistan’s tax collection machinery has under-performed, leading to recurring and unaffordable fiscal deficits. Catchphrases such as 'rampant corruption' have long been associated with the tax collection establishment, notably the Federal Board of Revenue in Islamabad. But a change for the better not only requires a major uplift in the performance of Pakistan’s tax collection machinery. It also requires a major lift in demonstrating the returns for taxpayers in forms such as the provision of essential services like healthcare or education.

Notwithstanding Khan’s claim to fame as the pioneer and founder of Pakistan’s first dedicated cancer hospital, average Pakistanis need to see far greater access to affordable and high quality healthcare than at present. Since becoming prime minister in 2018, Khan has overseen the widening of health cards distributed to constituents – a document that theoretically allows affordable access to healthcare facilities. Yet, a visible change in this area requires a major revamp of hospitals with the induction of newer equipment and state of the art facilities, along with a significant improvement in the quality of management. A similar revamp is waiting to happen across government run schools and colleges – a sharp contrast to their counterparts among privately owned and privately run institutions.

The link between access to basic services for the public and the economy must become central to Pakistan’s future. For years, successive governments have principally relied upon statistical evidence to lay claim to real or imaginary success. Yet, in the process, many have simply ignored the importance of the economy of a country being qualitatively different from that of a company. Unlike the balance sheet of a corporate entity, the balance sheet of a state must be built upon factors including reaching out to support areas on the periphery.

Unless the ruling structure successfully reaches out to a range of stakeholders to meet their fundamental needs, Pakistan runs the risk of any future economic upturn remaining far from sustainable. It is the choice of ignoring this fundamentally vital character of a state and its obligations that together create the risk of ignoring key areas of responsibility.

Going forward, decision-makers like Tarin or Baqir may well oversee a success story or two surrounding their areas of responsibility. But can Pakistan turn the corner unless its economic improvement lifts the lives of its people? To that key puzzle, the answer must remain in the negative.

The writer is an Islamabad-based journalist who writes on political and economic affairs.