Speaking on the economy

After two months in the shadows, the prime minister’s finance adviser has come out of hiding. In a press conference on Wednesday, Dr Hafeez Shaikh laid out his vision for managing the Pakistani economy. In our view, it lacked nothing, except vision. Perhaps we were too optimistic in our expectations of him, but Dr Shaikh seems to be relying on the generosity of the IMF and the 'Friends of Democratic Pakistan' to bridge the country's fiscal deficit. Our equivalent of a finance minister does not feel that solving the country’s problems is part of his job, though he seems focused on suppressing the symptoms. Perhaps we could offer him some suggestions.

In terms of ease of paying taxes, Pakistan ranks 143 out of 183 countries according to the “Doing Business Report” by the World Bank. It estimates that compliance with Pakistani tax regulations takes 560 man-hours a year, compared to the South Asia regional average of 285. If the minister announced an initiative to computerise and simplify the taxation process he would move the country towards an efficient taxation system. Dr Shaikh pointed out that the economy would benefit from having an export-driven orientation without specifying what initiatives the government will take to ensure this. The tax system is already skewed to promote exports versus producing for the local market and exporters in several sectors receive subsidies. What other initiatives does the government plan on taking? Dr Shaikh did not clarify. What was most troubling was that he did not articulate a clear, pragmatic vision to move the nation to a prosperous economic future. In bleak times, it is easy to forget long-term goals. Amongst Pakistani policy-makers, long-term thinking has been deemed optional but this economy craves a path that leads us in the direction of prosperity. The minister is not alone in deserving the blame, it’s also the fault of the journalist community, hardly any of whom have training in economics and none of whom seem capable of asking the minister tough, relevant questions. But the failure of the media does not exonerate the good doctor from prescribing a cure for what ails the economy. Dr Shaikh, we don’t need an economics lecture. We need leadership.

Published in the Express Tribune, May 15th, 2010.