Failure to put economy back on track
The think-tank noted that the pressure of continued borrowing for consumption and debt servicing increased the fragility of the external account. PHOTO: FILE
What a country Pakistan is, blessed with everything except leadership having wisdom and commitment. Leadership does not mean only political class and it also encompasses all segments of the society, but the worst is reserved for the intellectual class.
No doubt nature is generous to bless the country with fertile land, mineral resources, blue economy, mountain ranges and glorious deserts and we continue to count the blessings. However, successive governments have made sure that every opportunity is wasted at all costs. The most recent example is the China-Pakistan Economic Corridor (CPEC). There is no doubt that it is one of the biggest opportunities to build economic and industrial base of Pakistan but unfortunately, lack of wisdom, political point scoring and self-interest of different stakeholders are adversely impacting the mega project.
The ruling elite has turned Pakistan into an experimentation laboratory and battle ground for their egos. The first era of independence was lost to war of egos and power games. While the second era began with the slogan of private sector led industrialisation and green revolution, it culminated with the accumulation of wealth in few hands and inequalities. A study conducted by Dr Rashid Amjad in 1984 can be cited for exploring the dimensions of inequality introduced by green revolution. Socialism with Islamic characteristics was third wave of manipulation. It proved nothing except a way to capture private industry and business and stuff them with the political cronies. State owned enterprises were not spared either and the government appointed its people from bottom to the top. Islamic dimension of the economy was not part of any initiative. It ended with loss of business and economic growth.
The fourth wave kicked off with the deception of introduction of Islamic economic system. Unfortunately, there was nothing which could qualify for the definition of Islamic economic system. It was business as usual. The only difference was that the business class began to replace feudal class to run the economy. With the emergence of business class, corruption also started to gather pace. This period concluded with the demand from international financial institutions (IFIs) to go for structural adjustment program.
For this point onward, IFIs started to dictate the economy and compelled the successive governments to follow their recommended reforms. IFIs also unleashed an army of their preferred experts and donor agencies like DFID, USAID, UN joined hands with IFIs in this venture. Privatisation became a buzz word and every government tried to present itself as the champion of reforms and privatisation. However, the analysis shows that every government contributed its bit to the mismanagement and privatisation, which ultimately proved to be a failure.
A report from the Asian Development Bank confirmed the statement and highlighted that 44% of privatised state-owned enterprises were on the same level of performance and 34% deteriorated. In 2014, Dr Pervaiz Tahir presented two very interesting cases pertaining to the Kot Addu Power Company (Kapco) and Pakistan Telecommunication Company Limited (PTCL). Both companies were profit making entities before they were privatised. Following privatisation, Kapco increased the rates of electricity which negatively impacted the domestic industry and the market. Furthermore, Tahir highlighted that the consumption of electricity by the industry declined from 31% to 28%.
During the process, the country also got plagued with corruption. The new elite class did not care for the country and looted the resources mercilessly. Corruption became the common denominator of successive governments. The Pakistan Tehreek-e-Insaf (PTI) exploited the situation and came to power on the back of the slogan of corruption free Pakistan. However, PTI is miserably failing to control the corruption and place the economy bank on the track. Although PTI vowed to introduce the policy of using right person for right job before coming to power but the slogan disappeared since the party assumed office. It is following the past governments (PPP and PML-N) to adjust their political cronies or personal friends. The only difference is that PTI is relying on imported friends.
Although, expat and non-resident Pakistani (NRP) culture is not new to the country but PTI has taken it to new heights. It has been assumed by parties including PML-N, PPP and PTI that all wisdom lies with expats or NRPs and they have the solution to every problem. Moreover, foreign organisations or consultant firms are considered as ultimate source of wisdom. This is impacting the country on three fronts. First, expats or NRPs have no experience of ground realities of Pakistan. They try to apply liberal models without knowing the ground realities. Second, it is systematically killing the local wisdom, talent and the will to work because local experts have started to believe that there is no space for their growth and only expats or NRPs have the chances to prosper in Pakistan. They feel it is useless to work for the country and hence they look for opportunities to settle outside and return as expats.
Third, government officials or local experts love to work with foreign consultant firms directly or indirectly. Moreover, retired bureaucrats, military men and politicians started to establish their own think tanks. They have limited to no knowledge of issues and they use their influence to create space for themselves. This is extremely harmful for the country as the space for the independent research and policy advice is shrinking rapidly. International donor agencies are encouraging this phenomenon, as it helps them to achieve the project goals.
However, the worst part of the whole story is dishonesty exhibited by the intellectual class. It tries to support every government or institution local or international to secure their interests. The dilemma is that leadership also likes this particular class, as it tells the leadership what it wants to listen. The leadership is so fond of flattery that it cannot tolerate the right advice, leave alone the criticism. IFIs are also happy, as it pursues the agenda of IFIs. In recent times, another problem has emerged in form of hiring of retired government officials which is severely impacting the country. It creates multiple problems. First, the retired personals are already enjoying the post-retirement benefits and they simultaneously enjoy the privileges on jobs as well. Second, it hurts the national exchequer as the government has to pay them on two fronts. Third, it shrinks the job market and creates unrest among youth. Fourth, the government is forced to run social protection programs to cater to the needs of unemployed youth and people. If the retired people really want to serve the country, they should do it free of cost, as they are already enjoying the post-retirement benefits.
On top of everything, during the last two decades, Pakistan has handed over its economy to bankers and accountants such as Shaukat Aziz to Hafeez Sheikh, Ishaq Dar, Shaukat Tarin. They have been trained to maintain accounts and not to manage or steer the economy. They also possess no training to distribute the resources among the masses.
In conclusion, it can be inferred that the present tragic situation of economy is due to persistent failures of the successive governments. The incompetency of the current government is making the problem worse. The ruling elite needs to understand that this economic tragedy will provide fertile land for breeding the revolution. If Pakistan wants to avoid this situation, it needs to correct the course. Otherwise it should be ready for the worst consequences in near future.
The writer is a political economist
Published in The Express Tribune, November 15th, 2021.
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