The economy beyond the numbers

The voters will be judging the government’s performance not on numbers, but on the reality that they live every day.

There is far more to the Pakistani economy than meets the eye. The headlines about terrorism, for instance, mask a strong underlying economic potential that is just waiting to be tapped. But not all positive headlines about the economy deserve to be celebrated. The recent meetings in Dubai between Finance Minister Ishaq Dar and the International Monetary Fund (IMF) appear to have gone well. The IMF has given the Pakistani economy a clean bill of health and declared that the Nawaz Administration’s policies are on track with the promises made to the Washington-based lender. But count us among the unimpressed.



Our problem with the IMF and its approach to advising the government is its reliance on headline numbers. But the economy is far more than just the gross domestic product growth number or the size of the federal fiscal deficit. Look one layer beneath those banner numbers and the data tell a very different story. It is true, for instance, that the government is likely to have a far lower budget deficit this year than last year, but closer scrutiny reveals far less reason to be optimistic. For one, last year’s number was absurdly inflated by the incoming Nawaz Administration, which pushed up several expenses in a bid to set a low baseline. And while the government has cut back on some subsidies, far too many of the cuts to government spending have come from the development budget, a self-lacerating form of austerity the IMF never seems to be bothered by.

And even the IMF’s raised estimates for economic growth are hardly anything to write home about. A 3.1 per cent growth rate in a developing economy like Pakistan is practically recessionary. Given these realities, we find the finance minister’s satisfaction with his team’s performance to be quite disturbing and we think the prime minister should be quite concerned. The IMF may have given the Pakistani economy its blessing, but international financial bureaucrats do not have to live in the country. The voters, on the other hand, will be judging the Nawaz Administration’s performance not on the numbers, but on the reality that they live every day. The government’s rhetoric had better match that reality, or else the voters will not react kindly.

Published in The Express Tribune, February 11^th,  2014.

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