Pakistan’s economic ills

The IMF bailout package for Pakistan continues to be debated across the country, with allegations of sellout and compromise on sovereignty reverberating all around. While such debates and allegations are not new, the grim reality is that they have not only stirred the emotions of the people in general but have also caused concerns among the treasury benches.

Those who consider IMF packages a machination of developed countries go back in time in support of their argument. They contend that on capturing poor countries, the imperialists only exploited their resources, caring a damn about bringing any improvement in the quality of life of the people in those countries. It was due to the success of national liberation movements and the outcome of the World War II that the imperialists were forced to leave their former colonies. However now, they have devised a new way of clout and control. They no longer send their armies to physically occupy the territories, but make use of economic means to control them. In the neo-colonialism setup, multinational companies purchase rich raw material and human resource on cheap rates, thus retarding capital generation in Third World countries.

Cash-starved countries like Pakistan are caught in a vicious circle of poverty. Populist leaders, while in opposition, generate huge expectations by promising everything from poverty alleviation to human development, but when they ascend the throne, they are faced with stark realities of a capitalist economy mired in exploitation of myriad types. Rich in rhetoric of breaking the begging bowls, popular leaders find it difficult to break this vicious circle. Exactly the same has happened with Imran Khan whose rise to the power generated hopes of a new era of the “greatest happiness of the greatest number”, to quote Bentham. Amidst those hopes, however, critics warned that such dreams would be shattered as those wedded to the old ways of perks and privileges would be the biggest stumbling block to efforts for change. That the critics were not far from reality is evidenced by the inking of agreement with the IMF in sheer contrast to the tall claims of establishing a new economic order. Opponents of the government also allege that the agreement is shrouded in secrecy, and call for a debate in parliament as well as its approval from the same.

Pakistan has, throughout its past, modeled its economy on the lines proposed by the IMF and the World Bank. Papanek, one of the proponents of such models while suggesting a capitalist economy, advocates the social utility of greed to be essential for the progress of Pakistan. He suggests that even though it is the upper class that benefits from economic growth, progress has a trickledown effect on the people in the lower classes in the long run. To the contrary though, during the economic growth period in the Ayub Khan’s era, as the major chunk of wealth in Pakistan remained concentrated in a few hands, the trickledown effect did not reach the common man. And we are once again back to square one. Pakistan is like an ocean of poverty where a couple of hundreds live in the island of prosperity. The cash-starved economy of the country is unable to meet the rising expectations of people who yearn for all good things in life. When shattered, such dreams turn into frustration which may even lead to agitation. Influenced by the Ayub Khan economic model, of which Imran Khan is also an admirer, the present economic wizards appear to be treading the same path.

It is easy to indulge in the blame game and curse the past rulers, but certainly difficult to undertake bold decisions. This reminds me of a write-up by John F Kennedy’s ‘Profile in courage’ which insists that real courage of a leader is to take even unpopular decisions in the greater national interest. Now the question that arises here is: Can our leaders gather courage to take unpopular decisions? And what should be the right course of action? Such situations require leaders like Jamal Abdel Nasser of Egypt and Mohammad Mosaddegh of Iran who demonstrated courage by nationalising Suez Canal and the oil industry respectively, despite all international pressures. In Pakistan’s history, Zulfikar Ali Bhutto is on the same pedestal.

Those believing in the capitalist path to development know very well how nations can create wealth to generate more wealth through measures like setting up high-yielding manufacturing industry and then be a part of the global trade. There is also this need to shed nonproductive expenditure. Getting rid of the dependency syndrome and adopt self-reliance is also a must. Tax is one key area. With only one per cent of the population paying the income tax, an economic takeoff is sure to remain a distant dream. Azad Kashmir, Gilgit-Baltistan, the newly-merged tribal areas, Malakand Division and the rural economy enjoy exemption from most of the taxes, thus overburdening those that are already taxed. Moreover, no commercial enterprise, under the garb of charity, should be given tax exemptions.

The economy is sure to improve by expanding the tax net; enhancing foreign trade by normalising relations with neighbours; increasing the literacy rate and the standard of higher education; and honing the skills of the labour force to meet international standards; among other steps.

Published in The Express Tribune, June 5^th, 2019.

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