There can be no economic miracle in Pakistan!

When Ishaq Dar took oath as federal finance and revenue minister more than a week ago, there was an instant depreciation in the rate of the dollar versus the rupee; rise in the stock exchange index; and reduction in the prices of petroleum products. Does it mean that one person, who has twice earlier served as federal finance minister and escaped from Pakistan five years ago because of corruption charges, can cause an economic miracle? Is there any rational basis of Dar’s claim to fix the economy by stabilising the exchange rate; lower the interest rate and mitigate inflation?

Moreover, the meager $8 billion forex reserves, just enough to pay for only three weeks of imports, is another cause for concern. It will be nothing short of a miracle if Dar is able to have a paradigm shift in the economy because of harsh realities that will not allow the country to escape from the inevitable. In the ongoing fiscal year, Pakistan has to arrange $40 billion external financing. This is besides the $20 billion worth of losses the recent floods have inflicted. Artificial appreciation of the rupee against major currencies will not work because of high demand of the dollar for imports and for other purposes. In today’s Pakistan, miracles to salvage the economy are certainly not going to happen because of ground realities which are highly unfavorable.

Neither the IMF nor the World Bank or the friendly countries will come for the rescue of Pakistan because the country is constantly requesting donors to waive loans and provide more financial resources in order for it to avoid a financial default. Even in recent devastating floods, the country has not received substantial amount of financial assistance unlike in the case of the 2005 earthquake. Trust deficit and rampant corruption tend to discourage donors from providing cash assistance. Images of floods and the forceful appeal of the UN Secretary General to help Pakistan in this moment of crisis failed to bring positive results. Under the circumstances, Dar’s taking up the economy is a major test case for the PML-N led coalition government.

Things were also difficult when Dar took over as finance minister in 2013 because of the PTI-PAT sit-in in Islamabad in 2014, but he managed to deal with that crisis. This time the situation is different because Pakistan’s economy is in dire straits and a country of 222 million people with a conglomeration of internal and external threats along with the devastation caused by the floods cannot have a smooth sailing for Dar despite his so-called magical skills. In 2013, the PML-N enjoyed a two-thirds mandate; but in 2022, Prime Minister Shehbaz Sharif is heading a coalition of around a dozen parties — and that too with a razor thin majority.

The existential threat to the coalition government in the shape of Imran Khan is real, and it will be difficult for the PML-N “financial wizard” to lead a paradigm shift in the economy. The threat of famine following massive floods looms large and the government has meager resources to import food items in order to prevent a crisis situation. With all economic indicators predicting a hopeless situation, what magic wand is Dar going to wave to fix the issues which tend to aggravate the country’s political and economic situation!

One needs to analyse three major realities which will continue to undermine Dar’s “mystic” skills for an economic turnaround. First, the reality of corruption, nepotism, bad governance, absence of rule of law and lack of accountability needs to be taken seriously. Miracles never happen when the country is unable to deal with issues which seriously shatter work ethics. Nations are not built by mere words or rhetoric but must eradicate the culture of corruption and nepotism. How can a country be pulled from the brink of an economic disaster when it lacks the motivation, integrity and planning on the part of those who matter?

Dar cannot let miracles happen because his hands are not clean, as well as of many others who happen to be his coalition partners and frontrunners of his own party. Constant begging from donors and friendly countries will not help because the elitist culture of Pakistan is totally oblivious of ground realities pertaining to serious political and economic crisis. Artificially reducing prices and appreciation of rupees versus the dollar would be counter-productive and generate further crisis.

Second, no economic miracle is going to happen unless our leadership has eight qualities in theory and in practice: hard work, integrity, brilliance, vision, commitment, dedication, planning, and wisdom. Looking at the other models of success, particularly in developing world, one can learn from former Singaporean PM Lee Kuan Yu, former Malaysian PM Mahathir Mohammad, former Chairman of Chinese Communist Party Mao Zedong and Nelson Mandela, the founding president of post-apartheid South Africa. Other models of success are found in the UAE, Qatar, Muscat and Oman. Since the inception of Pakistan, leadership vacuum and the lack of qualities essential to successfully run a country is a bitter reality.

Whether in civilian or in military control, Pakistan failed to emerge as a role model in good governance, rule of law and sound work ethics. Laziness, incompetence, dishonesty, fraud and cheating became acceptable norms which mitigated Pakistan’s rating in human development index, corruption perception Index and human security index. Deterioration of quality of life of people in terms of absence of clean and safe drinking water for all, quality and compulsory education, housing, public transport and hygienic food are major challenges. When people at the helm of affairs are hated because of their corruption and nepotism, how can Pakistan put its own house in order? Third, miracles will not happen unless there is culture of merit in Pakistan.

When decisions are made on the basis of vested interests and likes and dislikes, the country can never emerge as a successful state. Erosion of merit has a long history in Pakistan which eroded the trust of capable and qualified people in the system responsible to run the country and led to an enormous brain drain. When public sector institutions like the Steel Mills, PIA, Pakistan Post, Railways, WAPDA, PTV and Pakistan Broadcasting Corporation are running in huge losses, it has to do with incompetent and dishonest people running them.