The naysayers

We are now a nation of naysayers. ‘Na..this can’t be done’; ‘this is beyond him’, or us, when we feel like a nation. Forget the Nike slogan, ‘Just do it’. Not for us. We always know why we can’t. Just the previous week this government decided to present its Budget for the next year as it also gave a summary of its performance for the ongoing one. Both seemed promising; rare for a nation which has embraced bad news in perpetuity. A few good things happened: Covid somehow seemed well-managed; perhaps devoid of other ideas the government ended up enhancing and optimising a social safety net which worked well to contain the effects of Covid on the most affected; and finally had a man at the helm at the finance ministry who could rise above numbers to forge an economic direction. For a beleaguered people and a listless economy this can be as good as it gets. Nyet. Not for those who ride the bandwagon of evening television to pontificate and sometime prophesise with divine surety why it will not happen. Damn Nike.

Most may have only brushed past Economics as a minor in their course of studies or just reported long enough on the subject as a journalist. Yet it is good to know a bit to tell others off than not knowing nothing and telling others off. But we retain a good mix. It is the more serious ones who I am most concerned with who just did not find anything right with whatever had been suggested. If indeed we have so many economists in the country why haven’t we ever heard someone suggest an alternate to what is presented; forget the need for a more relevant theory. For it we still must reach back to the havens of the despicable West. The diversity of the subject is established and how interplay of numerous facets alone can give real numbers but still it’s not like someone is about to snatch our bad times away. Give it a chance, for heaven’s sake.

When they said that Pakistan has been lucky to produce a bumper wheat, rice, maize and a sugarcane crop they suggested but this was the worst ever cotton crop for any year. When they suggested that the CAD still held positive in the first ten months of the financial year they countered that April was as bad as any and there were still two more months to go before CAD can be held positive with any finality. When the minister suggested that he plans for the economy to grow at 5% or higher in the next fiscal year the mean ones challenged him to trying doing it while keeping CAD positive. A positive CAD is what has already happened and not too many have agreed to that strategy unless of course the only aim was to hold onto FE which surely isn’t a model of growth. You got to spend a buck to make a buck even in a wager; this is economy. Unless growth wasn’t a strategy, only subsistence was. Something the IMF always prescribes to indebted economies — go slow. Here the swords were out simply because the FM proposed growing at a certain rate. If the government suggested that Pakistan had grown at a rate of 4% they said why weren’t the salaries increased by 30% and why dearness couldn’t be contained. Each is a different phenomenon.

I am no economist but I have learnt from observing and studying how politics of the world weaves around this most essential inter-relationship of society, economy and politics. Politics enables a society which the majority subscribes to and the economy sustains. But most of all I have learnt about how different models establish the nuance that politics will bring to economy. Ideological variations in politics and their impact on economic governance is best exhibited in the American system where the two parties hold their differences on the size of the government and its role in determining economic stakes; on the freedom of capital and whether a government must exercise some check and restraint over it, and how much; in proportioning growth and benefit; and if politics is remanded to ensure equitable distribution of finance and resource, if at all. And to tax more or less to sustain a governance model and its structures to enable the kind of society that a particular political strain prefers. Perhaps it is for the ‘haves’ to make such choices. Others, lesser fortunate must only make ends meet. And it is this reality that drives the Budget and the economy in Pakistan.

The Budget statement is just that, an annual expression of a state’s expected revenues and liabilities. Based on which it shall determine the fiscal space available to it for the next year and hence its policy preferences. It’s a statement of accounts and a policy paper. That’s it. Except that in the case of nations with Pakistan’s kind of limitations there is little maneuvering space. Hence there is little extraordinary. A heavily indebted economy like ours straitjackets our economic and strategic choices. We are tied into an international economic system which exercises its own compulsions over the limited choices that a nation can make.

There was a time when trade was a bilateral activity and prices held. That is when budgeting came easy. It also impacted the common man in predictable ways. Not now, when Budgets are a generalised statement with perpetually calibrated interventions. Commodities now trade on international exchanges where prices vary moment to moment. To anchor a gain around a fixed value is a non-starter. True, certain range predictions can be made but numbers will need to be tweaked continuously. And while production is a far more assured avenue of accruing gains it remains vulnerable to price shifts in the international market. Innovations in production and business models can help but will test an economy’s resident intellect as well as its ability to overcome inertia. International Finance Institutions will put an economies on prescription to secure their loaned capital. That is when receiving economies must act nimble and create fiscal space to move the economy forward.

Any budget for any year by any government would look the same as was presented this time with this kind of economy. Shahid Khaqan Abbasi said as much in 2018 when he handed government over to the PTI after presenting the 2018-19 Budget. If indeed a difference in economic terms is to be made it is in limiting waste and in containing expenditure. Country’s economy is reeling under poor strategic choices and distortions which have lain unattended. Even restructuring and reform will cost money which isn’t there. That is why it will always be more of the same — robbing Peter to pay Paul. Tweaking is most that is possible in a shackled economy. It remains a deft balancing act. Creating fiscal space by leveraging land, labour and capital to a more profitable use remains the key to improving prospects. Even the naysayers will agree. For the moment though it’s only being thrown about as a missile.

Published in The Express Tribune, June 18^h, 2021.

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