ISLAMABAD: All the major global financial institutions are seeing a rotting system in Pakistan. It is only the political elite that is refusing to see it.
The International Monetary Fund (IMF), World Bank and World Economic Forum find Pakistan on a bumpy road. Evaluations on their websites are based on the expected GDP growth, debt volumes, currency value, industrial production, export levels, capacity to generate tax and non-tax revenues and spending extravaganza.
Their projections indicate that Pakistan lacks a clear-cut policy for economic growth, business facilitation, and smart budgeting. These are universally accepted measures taken in all sustainable economies with welfare orientation and a stable democratic system.
Pakistan has most of the time being unable to embark on the right course. Choosing the right path always requires corresponding actions in the spheres of policymaking, governance as well as a smart evaluation of the economic potential.
Under a viable policy, the government allows the business to flourish and extracts utility charges, taxes, and non-tax revenues. It also prevents inflation from eating into savings of low and middle-income earners. Such savings are used for capital formation and expansion. So far, the country has failed to achieve all these objectives.
The government lacks the will to steer itself out of trouble via better governance and improved fiscal management. It consistently argues that the economy has slowed down because of decades of plunder and mismanagement by past administrations.
Can the economy recover with the help of conventional recipes or the government will have to go for unconventional solutions?
If such questions are posed to the economic managers in Islamabad, they will always emphasise that the country has been put on the right track and positive results will emerge soon. The government seems to be handling the economy as a source of meeting fiscal needs and not as a source of meeting public requirements. There are some indicators that are the most relevant in relation to the direction of the national economy. These include consumption and production levels, foreign and local investment and connection between the two as well as the availability of business finance.
These indicators clearly show whether the economy is going forward or backward. Keeping in view the level of interaction among these aspects, the public finance managers find the right clues for policy intervention and adjustment.
The level of intervention by the government helps to find out how the economy can be boosted. However, such an intervention will not produce results if other key indicators are not carefully looked at. These are the value of the currency, import and export quantum, and application of tax and non-tax instruments. Public finance managers manipulate the data in support of government mistreatment of the economy. Growing inflation, unemployment, and falling income levels indicate failure both on the economic and management sides.
The economy is headed in such a direction where it does not support the ordinary people and generate public money. There are no plans to make efforts to achieve such a growth that is required to keep employment and income at favourable levels.
The government needs to understand that besides the size and direction of the economy, tackling corruption and mismanagement should be the focus of all policy decisions. It must also look into the past economic downturn in all its analysis about what went wrong and how things can be corrected.
Pull the rot out of the system and it will gradually become functional in an active manner.
The writer has worked with major newspapers and specialises in the analysis of public finance and geo-economics of terrorism
Published in The Express Tribune, October 21st, 2019.
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