System is the thing

The economy of Pakistan has problems, some very serious. But much more serious is the uncertain political environment that undermines the will and ability to address these issues. Last week, it was observed in these columns: “By letting the rupee fall, the government is signalling a tough stance. It may be planning to present the next budget also before June 5^th, its last day, to announce tax and other structural reforms. But to last until then, it will have to ensure the passage of bills related to the delimitation of constituencies and reforms in Fata, besides a National Finance Commission award reflecting the new census and an enlarged [Khyber-Pakhtunkwa] K-P.”

The good news is that the delimitation bill has been passed. Only one vote against it demonstrates that consensus-building faculty is still alive. A little more of the same will bury the colonial legacy and the self-inflicted backwardness in Fata. It has been decided to present the 2017-18 budget in May next year. This is a bold decision and should, in the wake of the army chief’s unequivocal pronouncements in the Senate, lead to a wholesale cancellation of sherwanis ordered by the unelectable technocrats. The decision would limit the caretakers to their constitutional role — routine running of the government and facilitating elections.

This will happen only if the budget is more than routine. The first order of business is to appoint a fully empowered and competent finance minister to steer the process. Secondly, the dormant process of NFC should be reactivated and the award reflected in the budget. The award should focus on accounting for the changes necessitated by the census. Punjab has shown maturity by not protesting the reduction in its parliamentary seats. It should demonstrate the same spirit in accepting the decrease in its share of the divisible pool of taxes. Following the proposed merger of Fata with K-P, the share of the latter has to increase. Under the Constitution, the provincial share cannot be reduced. It can be kept unchanged though. Other provinces should accept an unchanged provincial share. The purpose is to maintain the continuity of the NFC process. Secondly, tax reform must be taken up in the right earnest. No reinventing of the wheels, please. Just operationalise key recommendations of the Tax Reforms Commission. Thirdly, expenditure proposals need to concentrate on the ongoing projects. New projects will constrain the choices of the future government. They are best avoided in a budget that may not necessarily be implemented by the formulating government.

Just as in the case of the delimitation of constituencies and Fata reform, a reform-loaded budget will require a consensus across the political spectrum. Achieving such a consensus among parties gearing up to compete in an election not too far away is no easy task. It is, nonetheless, a task that is worth attempting. An agreement on a common minimum economic agenda will pave the way for political stability, as the work done by one government will not be rolled back by a succeeding government. Before long, regular governments functioning responsibly will obviate the need for caretaker governments. Like most civilised countries, the regular governments should be acting as caretakers towards the end of their terms. As for technocrats hoping to serve, the political parties should open doors for them to let them be part of the electoral process. They must understand that the system is the thing. Rather than waiting for its subversion every now and then, they should be a part of it. Democratic continuity provides a better and more inclusive framework for the long-term sustainability of economic growth and development.

Published in The Express Tribune, December 22^nd, 2017.

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