Year 2021: pandemic, politics and economy

The key challenge would be to follow through on these plans and take them to fruition

Hasaan Khawar January 04, 2021
The writer is an international development professional, based in Islamabad

The year 2020 was about Covid-19 but 2021 would be about vaccination. All said and done, Pakistan did a wonderful job in sailing through the pandemic. The stimulus package was timely and the decision to open up the economy in May paid dividends.

But now it’s time to get back to ‘normal’. Countries all around the globe would be racing to vaccinate their populations. Assuming that the virus doesn’t mutate and vaccines remain effective, extensive vaccination is expected to restrict the pandemic to a few pockets with low vaccination coverage. Covid would no longer be a global problem and instead would be reduced to a local challenge.

But the countries that will fall behind in this race will face a double jeopardy. Not only will their population remain vulnerable, but they’ll also be subjected to increased restrictions. The single-most important challenge for the PTI government in 2021 will therefore be to get Pakistan its due share of the Covid-19 vaccine and to ensure that we are not left behind.

On the political front, fireworks are expected to continue in 2021 at least till the Senate elections. But even past that, if the government doesn’t back down on its accountability mantra, the overall political atmosphere will remain charged and can fuel a fire, if there is a spark. But a change in government does not seem likely in 2021.

However, governance remains a sore point for the government, especially in Punjab. The province continues to see a game of musical chairs on key bureaucratic positions, and the government has failed to dispel the impression of misgovernance. Punjab is where the political future of PTI will be settled in the next elections and that is where their Achilles heel is. So far, the Prime Minister has not budged from his unflinching support for Usman Buzdar but 2021 could witness a change. Moreover, next year is likely to be the year of local government elections, which could be a rude awakening for PTI regarding its political standing in the province. If that happens, the PM will have to rethink his Punjab strategy.

On the economic front, 2020 was relatively a better year. Besides the pandemic response, the government successfully managed the current account deficit, progressed well on the FATF action plan and provided incentives that helped stimulate growth in selected sectors like construction and textile. On the development side, the hitherto ignored Mohmand and Diamer-Bhasha dams have taken centre-stage on government’s priorities.

In addition, the government is also progressing on state-owned enterprise reforms. While the plan to split Pakistan Railways seems cosmetic and not much different to what happened in the power sector unbundling in 1990s unsuccessfully, the decision to reduce workforce in Pakistan Steel Mills and PIA seem to be a step in the right direction and an indication that the government is willing to take politically tough but strategically correct decisions. In addition, power sector reforms including the renegotiation of contracts with IPPs, provincialisation of distribution companies (DISCOs) and deregulation through a multi-seller/multi-buyer model can potentially be a game-changer in addressing the longstanding circular debt issue and to attract investment in the sector. However, the government would need to be watchful of food inflation, which spiraled high in 2020 and kept haunting the masses.

If the economic recipe adopted by the PTI government works as intended, the construction and textile sectors will provide growth; market-determined exchange rate will provide a check against future balance of payment crises; power sector and SOE reforms will pave the way for structural changes; whereas the two dams will provide legacy projects for Imran Khan. The key challenge, however, would be to follow through on these plans and take them to fruition.

Published in The Express Tribune, January 5th, 2021.

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Asghar Ali Khan | 1 month ago | Reply

A candid and captivating insight into the political maneuvering and economic management by the PTI regime in Pakistan. It effectively summarizes the moves and shakes of Government s battle against COVID-19 in 2020 and its continued cautious venturing in 2021. Commendable Hasaan Sb

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