Economy and political system

Of late, Prime Minister Imran Khan made some important changes in his cabinet and the most important of them is the change of finance minister Asad Umar, national health services, regulation & coordination minister Aamir Kiyani and petroleum minister Ghulam Sarwar Khan. The changes were primarily necessary in the wake of the deteriorating economic situation.

Despite having such diverse and extensive experience, why they could not run their respective ministries effectively and efficiently is a very pertinent question. The most important lesson here for each of us and the policymakers to learn is that the economy is a very specialised field and it cannot be left to just politicians to fix the fundamentals of the country’s economy and its key aspects of fiscal, monetary and trade policies.

As Von Clausewitz very rightly said that war is so serious a matter to be left only to the generals, we can argue that the economy is so important and delicate a sector to be left to be managed merely by politicians and bureaucrats. In this context, the appointment of Dr Hafeez Shaikh as PM’s Adviser on Finance is a step in the very right direction. There are also some other unelected advisers of the PM, like Dr Ishrat Hussain and Abdul Razaaq Dawood, who are looking after important portfolios in the federal government. The appointment of Dr Shaikh and other unelected advisers has put huge question marks on the viability and vitality of the entire parliamentary system of the country. Indubitably, PM Khan and his government have many shortcomings in their policies and approach to put the economy on the right track, but if we look deeper into our economic and financial woes, the roots could be traced back to the inception of real parliamentary system in 1970s when prime minister Zulfikar Ali Bhutto came up with his nationalisation policies, followed by pseudo ‘Islamisation’ of the economy by General Zia in the 1980s, public-private partnership of Benazir Bhutto in the late 80s and mid-90s and the privatisation and deregulation policies of Nawaz Sharif in the 1990s. Importantly, all three dictatorial regimes — Ayub Khan’s in 1960s, Ziaul Haq’s in the 1980s and General Musharraf’s in 2000s — led a fundamentally presidential system in which the economy performed far better. However, the fundamental problems were the structural and systemic flaws of the country which could not be addressed.

A man from corporate sector, Umar, could not look at the economy from a strategic standpoint. When the PML-N government left in late May 2018, the state of the economic health of Pakistan could be gauged from the fact that the current account deficit in the eleven months (July 2017-May 2018) of the preceding financial year increased by 43 per cent relative to the same period of the previous financial year. This was a huge current account deficit by any economic standards as the total deficit amounted to $5.96 billion. Whereas the total current account deficit for the outgoing fiscal year had swollen to about $17.5 billion. Such colossal current account deficit of Pakistan then and now has had four key reasons — huge import bill, sluggish exports, significant reduction in workers’ remittances and negligible foreign direct investment. The PTI government’s financial team could not work to improve the situation on all these economic fronts.

Now Imran Khan has entrusted the control of a number of ministries to technocrats and experts, who are not part of parliament. Does this mean that the political system is not producing the leadership which could run the affairs of the country adroitly and deftly? This situation gives credence to the argument and the debate going on the country that an elected presidential system of governance has become a crying need for the country.

Published in The Express Tribune, April 28^th, 2019.

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