It has now become a depressing routine for the few in the country who still care enough about the economy to follow it. The State Bank of Pakistan’s report on the state of the economy during the first quarter of the current fiscal year paints a dismal picture, even with the optimistic numbers that suggest an improvement over the previous year. The problem is not the figures themselves. Inflation is headed lower and will likely stay below the target of 12 per cent. While economic growth is sluggish, the government’s revenue collection has seen robust growth of about 27 per cent, suggesting that the budget deficit may not be as bad as last year. And the current account deficit remains under control, though the rupee has declined by around six per cent since last year.
No, the real problem is the fact that the government has neither the desire nor the courage to introduce the systemic reforms necessary to get the economy back on track. And therein lies the problem: while the entire country seems to be abuzz about memos and who said what to whom in the halls of power, it appears that the business of actually governing this country has been all but completely ignored. Every single one of the numbers that improved was due not to the government’s efforts but simply because they got lucky. Inflation, for instance is declining because food prices have not risen as sharply as expected, largely due to better than expected crops and stable international prices. And, as the State Bank points out in its report, revenue growth was stellar not because of anything the government did but because of the customs duties paid on higher levels of imports.
What is depressing about this government is that it knows exactly what needs to be done, but is either too distracted or does not care enough to implement what are often highly sensible — if somewhat politically difficult — plans. Part of this is a problem in the media: far too many of its practitioners do not understand the economy and are thus susceptible to sensationalism, which in turn reduces the political space for the government to act. But ultimately, it is the responsibility of the government itself to sell its economic plan. That it has not done so is a political failure on the part of the government. They have done well to survive other challenges. Now how about a little bit of governing?
Published in The Express Tribune, February 2nd, 2012.
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