Political instability perpetuates economic instability and also breeds corruption, mismanagement and bad governance, which ultimately affects the poor people. Consistency in policies is another fundamental requirement for economic well-being.
This was said by NUST Business School Principal Ashfaque H Khan during a seminar ‘Impact of Current Political Deadlock on Pakistan’s Economy” held by Sustainable Development Policy Institute (SDPI) said a press release on Monday.
Khan said that the current government has failed to implement reforms and called back several reforms on manipulation of smaller allies in the government, such as reforms on the issue of value added tax.
In the past four years, the government has appointed four governors of the state bank, four finance ministers, four secretaries, five chairmen of the central board of revenue. “In such a situation where there is no stability in economic team, how can we look for consistency and stability in economic policies?” he questioned.
He predicted further depreciation in the rupee, adding that a depreciation of one rupee would increase Pakistan public debt by almost Rs60 billion in addition to increasing the interest rate, inputs costs, subsidies and pile up of circular debt.
“During the last four years, Pakistan has accumulated a debt equal to last 60 years. The balance of payments is another issue the country are will face in future,” he said, adding that financing the deficit will be difficult as IMF has not yet issued any letter of comfort to Pakistan.
Referring to Sri Lanka and other countries, SDPI Executive Director Dr Abid Suleri was of the view that corruption was never a major impediment in development, while conflict does not hinder economic growth either.
“It is the right economic policies with firm implementation which stimulate economic growth,” said Suleri.
“Over the years, Pakistan has showed inconsistency and uncertainty in policies, due to which economic growth has not been in sync with human development,” he said.
He called for normalisation of civil-military relations and called upon political parties to declare their manifestos immediately before the people of Pakistan.
SDPI Research Fellow and Head of Economic Growth Unit Dr Vaqar said the current political impasse between various state institutions has resulted in stagnation in growth and investment.
He said that key economic threats such as rising debt burden, surge in global oil prices, reduction in exports and such matters are expected to adversely affect inflation. But sadly due to the ongoing political and administrative crisis it seems that these economic issues are not on government’s priority agenda.
Expressing confusion over the ‘ever-changing’ political and economic set up, Dr Vaqar said, “We don’t know who is incharge in agriculture sector after the 18th amendment. The country is still holding large stocks of wheat which should have long been exported.”
Relating it to the impact on agriculture sector, he said, “The import of fertilizer was delayed. The cane crop now fears marketing delays and none of the provinces have so far come up with financial implications of 18th amendment for the medium term,”. He said while elaborating the political impediments between the centre and federation.
Published in The Express Tribune, January 24th, 2012.