Caretaking the economy

The failure of the political class to sign a Charter of Economy after the Charter of Democracy in 2006 continues to reduce their space in the arena of the state. Economic uncertainty following the no-confidence motion was made worse by the politicking around the appointment of the COAS. Finance Minister’s games with the IMF shattered the confidence of foreign investors and creditors. It is no secret that that the Establishment had to step in to secure the signing of the Stand-By agreement with the IMF. It also convinced donation-weary friends in the Gulf to invest in five priority areas. As a follow-up, the Special Investment Facilitation Council (SIFC) was set up last month to ensure the timely execution of agreements. This set alarm bells about the engineering of an elongated technocratic set-up of caretakers. Statements were made about the possible amendments to the Elections Act 2017 to allow powers of the elected government to the caretakers. To circumvent the possibility of an extended caretaker government, the idea of a political prime minister was advanced. Adding insult to injury, the trial balloon of the incumbent finance minister assuming the mantle was floated. It was timed with the self-righteous incumbent appearing on various TV channels invoking religion in self-affirmation.

The irony is that the government itself is willing to extend the caretakers life by dissolving the assemblies earlier than their natural end. It also allowed the caretakers in Punjab and KP to live longer than the Constitutional stipulation. The proceedings of the joint session of the Parliament during this week provided yet another indication of why the economy cannot be left to the political class alone. This class is willing to protect its own pork barrel otherwise known as development funding, but is unable to appreciate the need to take forward the hard-won agreement with the IMF. Same is true in the case of the investment and disinvestment agreements. Backchannel intervention became necessary for the passage of the Elections (Amendment) Bill, 2023. Section 230 has been suitably amended to allow the caretaker government “to take actions or decisions regarding existing bilateral or multilateral agreements or the projects already initiated under the Public Private Partnership Authority Act 2017, the Inter-Governmental Commercial Transactions Act 2022, and the Privatisation Commission Ordinance 2000.” This is not all. While the joint session of the Parliament was passing the amendments to the Elections Act, the federal cabinet met on the same day to give assent to the draft amendment bill of the Investment Board Ordinance 2001. Towards a “Whole of the Government” policy for foreign investment, it places SIFC under this law, provides its basic structure, working procedures and cooperation mechanisms with federal ministries and provincial governments.

The entire episode casts doubt on the very idea of caretaker government. In most democracies, the outgoing government continues during elections with limited powers. No caretaker set-up in the past is known for its neutrality, the main reason for their existence. The one about to be set up may be no different. In the process, the environment for investment, the main driver of economic growth, suffers. This is for the first time that an elected government is handing over an ongoing IMF programme to caretakers. In 1988, the first Benazir government was made to sign up on the programme negotiated by the interim set-up under President Ghulam Ishaq Khan. The present elected government could have done better by making a one-time amendment and restricting the caretakers’ tenure to two months. As usual, political capital took precedence over investment capital.

Published in The Express Tribune, July 28^th, 2023.

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