Pakistan

Economics and the PPP

April 14, 2010

KARACHI: This is with reference to Dr Pervez Tahir’s article ‘The PPP’s economic poverty’, published in your newspaper on April 13. A good politician knows when his days are numbered. Perhaps the reason that no one from within the PPP comes forward to take up stewardship of the economy is a sign that no one wants to take charge of a sinking ship. Installing technocrats serves three purposes: 1) it is popular with international finance and lending institutions; 2) they can be easily discarded when the need arises and 3) governments can, if they need to, quite easily piggy-back on the technocrat’s achievements and lay claim to them.

COMMENTS (1)

Meekal Ahmed | 14 years ago | Reply Pakistan's economy is not a sinking ship. To be sure it is recovering from a calamity largely of its own making making -- but a calamity made worse by external exogenous price shocks followed by the down-burst of the worst global recession since the Great Depression. The out-going Finance Minister Mr. Shaukat Tareen did a commendable job in keeping a steady hand on macroeconomic policies. There were the usual slippages in the IMF program but none were irretrievable. Macroeconomic imbalances have been reduced, foreign exchange reserves built-up to more comfortable levels, the rupee has stabilized in foreign exchange markets, workers' remittances have surged and asset market prices have stabilized. There is a palpable sense that confidence is returning. The economy is struggling to grow against the head-winds of power outages, a difficult security situation and shortfalls in external financing. But growth will slowly but inexorably revert to trend provided we don't do anything foolish. Pakistan's biggest macroeconomic problem at present is high inflation and the looming risk that it may turn sharply upwards and embed itself in expectations of economic agents. Inflation needs to be brought down by whatever macroeconomic and supply-side instruments and initiatives the government has at its disposal. The authorities need to stop sounding cavalier and seeming to be callous about inflation. Bringing inflation down should be the government's number one economic policy priority. No country can thrive and grow in an environment of high and volatile inflation. As for PPP economists. I'm afraid I don't know of any. Dr. Pervez Tahir is a very fine economist educated at Cambridge University but I don't know whether he is PPP or was asked. As for the others who were rumored to have been asked, they are not from the PPP to begin with. One served Nawaz Sharif and the other the government of Shaukat Aziz.

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