While the political stability in Pakistan has been a big question mark in recent years the economic downturn of the country is inflicting irreparable losses without much notice. It is important to note that as the economic policies are indirectly the result of our political conditions, the former hit the people directly. However, the decision-makers seem to be least concerned as they personally might have benefitted from the political instability and poor economic conditions. Then the adverse economic conditions prevailing in the country are also the consequence of the incompetence and self-centered politics and policies of our political leadership. So when the national elections are just round the corner the incoming government would face colossal economic challenges. Therefore, there is a need to have a complete reassessment of our macroeconomic policies by the next government immediately after coming into power otherwise the economic catastrophe has already engulfed us, will remain irreversible.
The state of economic health of Pakistan could be gauged from the fact that the current account deficit in the eleven months (July-May) of the preceding financial year increased by 43 percent relative to the same period of the previous financial year. This is a huge current account deficit by any economic standards as the total deficit amounts to $5.96 billion. Although the total current account deficit for the outgoing fiscal year has so far not been made public by the State Bank of Pakistan (SBP) but it is feared to have swollen to about $17.5 billion. Such a colossal current account deficit of Pakistan has mainly three reasons. These include huge import bill, sluggish exports and significant reduction in workers’ remittances.
It is important to note that the import bill for the eleven months surged to $50.71 billion. Most of the imports have been of consumer goods which have resulted in such a huge import bill. The depreciation of the rupee by more than 15 percent against the greenback in the last six months also contributed to the surging import bill. This shows the failure of the Pakistan Muslim League-Nawaz (PML-N) government’s economic policies. During the said period, remittances of workers remained $18.03 billion, which is a significant decrease from the previous years. The PML-N government could not encourage economic exports because of erratic policies. Importantly it could not address the energy crisis in the country due to which the country’s manufacturing sector’s full potential could not be utilized. It may be remembered that the PML-N got its mandate in 2013, mainly due to its promise of ending the power crisis and outages within two years of its assuming power. This promise has not been fulfilled after five years of government.
All these negative trends in the economy show the failure of the economic policies of the outgoing Pakistan Muslim League-Nawaz (PML-N) government. So the much trumpeted claims by the PML-N government that it made an economic turnaround, put the economy on track and achieved significant economic growth have been shallow. This can also be gauged from the fact that the finance minister of the PML-N, Senator Ishaq Dar, has become absconder and evaded NAB courts and corruption charges. So what reforms could such a person have brought to the national economy when he could not answer the court of law about his own ill-gotten wealth. So, whatever economic policies the PML-N government pursued created such a mess that has brought the country to virtual economic default. The PML-N government has evaded default by heavy borrowing from the International Financial Institutions (IFIs) and domestically. Today Pakistan’s foreign debt is in the vicinity of massive $90 billion. The next government would have to cleanse the Augean Stables to put the economy on track and decrease the current account deficit. Otherwise, it would be well-nigh impossible for the government to move forward and expect any meaningful economic growth. While unable to do much the next government may keep on cursing the PML-N government and earlier rulers for the mess. This situation needs to be avoided.
On its part, the Pakistan Tehreek-e-Insaf (PTI) of Imran Khan, which according to two key surveys of Gallup Pakistan and Pulse Global is the leading contender for political power in the 2018 elections, has announced the post elections 100-day plan which includes the economic revitalization. The cornerstone of this plan is creation of 10 million jobs within five years. This part of the plan would attract the most attention and interest and could result in many undecided youth voters end up casting their ballot in favour of the PTI in a hope that the party government may provide them jobs. But our economic challenges are so enormous that it could not be addressed with such election-specific plans. Moreover the proposed step to establish a “Council of Business Leaders” to improve Pakistan’s global business standing and raising of “Pakistan Wealth Fund” to fund institutions such as the Pakistan International Airlines, Pakistan Steel Mills and power distribution companies (DISCOS) to bring “revolutionary changes in them” are overly ambitious. The PTI post-power 100-day plan is shrewdly silent on claims regarding ending the acute power crisis in the country and the only promise there is an unspecified timeframe to put an end to power crisis. However, that issue needs to be addressed on a war-footing. The PTI or any other party which may form the next government must learn from the history of our largely failed economic policies.
In this regard the next government must keep in perspective that Pakistan’s economic policies have been erratic, lacking sustainability. A trade and investment friendly environment cannot be created through such policies because investors and traders are driven by the profit-motive. Moreover, the fundamental problem with Pakistan has been that economic objectives have been subservient to political aims. Further, as the country has been in a perennial antagonistic security atmosphere, economic objectives of foreign policy have been subservient to security objectives.
The political, security and governance atmosphere, which we have had in our country, has not been conducive to economic stability and a business and investment-friendly atmosphere. The next government must rise above this static thinking and come up with innovative ideas. If India could make a huge economic turnaround through its well–conceived Shinning India polices in the early 1990s, Pakistan is equally capable to replicate it provided the vision comes from an enlightened and capable leadership.