How to attain economic security

It is imperative to declare economic emergency, design three-year recovery plan

ISLAMABAD:

It is a welcome change to recognise economic security as one of the pillars of the national security strategy. Internalising this narrative, however, would need a paradigm shift and a number of bold decisions.

Firstly, there has to be a fresh approach towards economic policy design and implementation mechanism. To start with, it is imperative to declare an economic emergency and design a three-year economic recovery plan for that the current state of economy may provide a very fragile foundation for economic security.

Following that, we need to design comprehensive, pragmatic and measurable short (one-year), medium (five-year) and long-term (15-year) strategic economic policies.

The next stage would be harmonisation among fiscal, debt, monetary, trade, industrial, foreign, agriculture, food security, water, SME and services policies in order to effectively implement the new narrative of economic security.

A proper monitoring and evaluation system should be put in place to make these policies work and adjust whenever and wherever required. Reporting and statistics should also be redesigned to highlight main trends and gaps rather than moulding statistics for political point-scoring.

There is a particular need to synchronise foreign and economic policies. A renewed focus should be on commercial diplomacy beyond the current archaic structure of sending commercial officers.

There has to be a well-designed commercial diplomacy strategy, supported by relevant institutions and qualified personnel and aimed at enhancing international trade and exports, attracting investment and tourism and forging long-term and strategic ties with relevant countries.

Proactive approaches and commercial intelligence is the name of the game that may not be played by many of the officers of civil services enjoying prized postings abroad.

Secondly, the primary focus of economic security and relevant policies has to be the citizen of Pakistan, followed by the state and then the businesses.

At present, it is rather the opposite unfortunately. There is no denial of the fact that businesses run any economy. They, however, do not need the current level of pampering and subsidisation.

There will always be businesses and industry for the market of 220 million and still growing. Someone will fill the gap if the pampered ones do not feel like doing business in a competitive and efficiency-based economic policy paradigm.

Thirdly, we need to focus on economic empowerment of each and every citizen, particularly women, so that they become economic actors or players.

Ability to become an economic operator is seriously constrained at present, particularly when it comes to access to capital, entrepreneurship, ownership and titles particularly for rural women and ease of doing business.

The banking system, regulatory and business support institutions are geared towards supporting big businesses and established names. Banks, in particular, are least interested in advancing loans to entrepreneurs, rather they are happy in lending via credit cards, housing and auto loans.

A realistic credit allocation system and monitoring is required to enable the new economic operators.

Fourthly, we need to identify the strategic sectors for economic security and then define the state’s proactive role in facilitating the smooth functioning of these sectors, rather than leaving totally to the markets.

These sectors include energy, food and agriculture, water and infrastructure. There should be long-term planning and priority investments into these sectors.

Fifthly, the government support, especially subsidies, should be reformed to support the sectors that are efficient and give a better input-output ratio.

There is a need to break the strong industrial lobbies, which have been subsidised for years without real and long-term benefits to the economy.

Such a situation actually contributes to economic insecurity. For example, what have we gained from protecting auto and sugar sectors for years? Have we developed indigenous technologies or efficiencies through such protection? Quite the contrary in fact!

Why not to divert some of these subsidies to the services sector, particularly the ICT that is yielding much better results? Rent-seekers are denting the economic security.

Sixthly, we need to build trust in our economy, both internally and externally. While we are craving for foreign direct investment, how much internal investments do we mobilise, particularly in productive sectors of the economy?

Why can’t we divert the savings from being invested in the real estate-hyped market towards productive sectors of the economy or long-term investment funds for infrastructure?

There is a lot more one can argue, and certainly, those who matter already know a lot of this. There are great examples of institutions such as the Economic Advisory Council, Planning Commission and so on.

There are also innumerable political statements and slogans and even inaugurations of initiatives. Not much sees light of the day unfortunately. What could be done to change it?

Probably, we need to separate economic security from political security of the governments in power. Attaining economic security warrants bold and long-term decisions, which fall victim to short-term political security.

Lastly, just a side note; economic security warrants closing and showing doors to the economic hitmen.

The writer is an international economist

 

Published in The Express Tribune, January 10, 2022.

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