Another five-year plan?
The 18th Constitutional Amendment and the 7th NFC award have reduced the role of the Planning Commission
The writer is a senior economist He can be contacted at pervez.tahir@tribune.com.pk
After the failure of two mini-budgets to give a direction to the economy, the 12th five-year plan is being touted as the road map. A macroeconomic framework is shuttling between the Planning Commission and the Ministry of Finance. The monetary stance to be announced soon is also likely to be influenced by this framework. Any further increase in the interest rate may undermine the incentives allowed in the second mini-budget. This was also the sticking point in the last interaction with the IMF.
Planning in Pakistan has had a chequered history. The planning minister has declared the 11th five-year plan a complete failure in terms of the targets set. This was the first operational plan in the framework of Vision 2025. There is no knowing whether the Vision document has been abandoned, just as its predecessors, Vision 2030 and Vision 2010, were in the past. The 11th plan, finalised in its third year, showed the previous five-year period, 2008-2013, as a growth disaster. During the same period, ironically, Nadeemul Haq came out with A New Growth Framework. It was a breath of fresh air. Despite all the approvals at the relevant fora, the document was largely ignored by the government machinery, much in the same fashion as the run of the mill five-year plans before. In 2009, the Tenth Five Year Plan (2010-15) had been drafted, but never launched. There was an abortive attempt to formulate the Ninth Five Year Plan 1998-2003 towards the end of the second Nawaz government. During the Musharraf period, a Ten Year Development Perspective 2001-11 was prepared. Subsequently, a Medium Term Development Framework 2005-10 was also prepared.
In terms of the stated objectives, only two plans — the second five-year plan 1960-65 and the Sixth Five Year Plan 1983-88 — can be regarded as successful. Incidentally, both were associated with Dr Mahbubul Haq and dictatorial regimes of Ayub Khan and Ziaul Haq. Apparently, a centrally directed economy and professional leadership of economic policy coordination were critical to this success. However, the former plan sowed the seeds of the alienation of East Pakistan and the latter left the economy with a fiscal deficit of nine per cent and a current account deficit of around four per cent of the GDP, landing the elected government right in the lap of the IMF. Over the years, especially since the start of the structural adjustment programmes with the IMF in 1988, the finance ministry has assumed the leadership role in the economic decision-making. Three- year programmes of adjustment took precedence over the largely academic exercises of five-year planning. The Planning Commission became just another ministry, concerned mainly with the project approval and the development programme. Even this role was constrained by the finance ministry determining the size of the development budget. The 18th Constitutional Amendment and the 7th NFC award have reduced the role of the Planning Commission further. Instead of coming to terms with the new realities of a decentralised economy and development spending, the Planning Commission continues to live the past. Under the Constitution, national planning and national economic coordination fall in the Federal List, Part II, not Part I. Planning, therefore, is not exactly a federal subject. The Planning Commission should have members representing the provinces, not as at present. The spirit of the Constitution will be satisfied best if the Planning Commission acts as the secretariat of the Council of Common Interests. This will ensure national ownership of the plans and allow the 12th five-year plan to give a direction to the economy.
Published in The Express Tribune, February 1st, 2019.
Planning in Pakistan has had a chequered history. The planning minister has declared the 11th five-year plan a complete failure in terms of the targets set. This was the first operational plan in the framework of Vision 2025. There is no knowing whether the Vision document has been abandoned, just as its predecessors, Vision 2030 and Vision 2010, were in the past. The 11th plan, finalised in its third year, showed the previous five-year period, 2008-2013, as a growth disaster. During the same period, ironically, Nadeemul Haq came out with A New Growth Framework. It was a breath of fresh air. Despite all the approvals at the relevant fora, the document was largely ignored by the government machinery, much in the same fashion as the run of the mill five-year plans before. In 2009, the Tenth Five Year Plan (2010-15) had been drafted, but never launched. There was an abortive attempt to formulate the Ninth Five Year Plan 1998-2003 towards the end of the second Nawaz government. During the Musharraf period, a Ten Year Development Perspective 2001-11 was prepared. Subsequently, a Medium Term Development Framework 2005-10 was also prepared.
In terms of the stated objectives, only two plans — the second five-year plan 1960-65 and the Sixth Five Year Plan 1983-88 — can be regarded as successful. Incidentally, both were associated with Dr Mahbubul Haq and dictatorial regimes of Ayub Khan and Ziaul Haq. Apparently, a centrally directed economy and professional leadership of economic policy coordination were critical to this success. However, the former plan sowed the seeds of the alienation of East Pakistan and the latter left the economy with a fiscal deficit of nine per cent and a current account deficit of around four per cent of the GDP, landing the elected government right in the lap of the IMF. Over the years, especially since the start of the structural adjustment programmes with the IMF in 1988, the finance ministry has assumed the leadership role in the economic decision-making. Three- year programmes of adjustment took precedence over the largely academic exercises of five-year planning. The Planning Commission became just another ministry, concerned mainly with the project approval and the development programme. Even this role was constrained by the finance ministry determining the size of the development budget. The 18th Constitutional Amendment and the 7th NFC award have reduced the role of the Planning Commission further. Instead of coming to terms with the new realities of a decentralised economy and development spending, the Planning Commission continues to live the past. Under the Constitution, national planning and national economic coordination fall in the Federal List, Part II, not Part I. Planning, therefore, is not exactly a federal subject. The Planning Commission should have members representing the provinces, not as at present. The spirit of the Constitution will be satisfied best if the Planning Commission acts as the secretariat of the Council of Common Interests. This will ensure national ownership of the plans and allow the 12th five-year plan to give a direction to the economy.
Published in The Express Tribune, February 1st, 2019.