In recent interviews, Pakistan’s distinguished economists have unanimously expressed the belief that the prospects for Pakistan's economy are unlikely to improve in the foreseeable future. To paint a bleaker picture, the advent of an elected government next month is likely to exacerbate the situation.
The rationale behind this prediction is as follows.
The incoming government will assume office with promises of job creation, yet employment opportunities are likely to remain scarce. The previous PDM government left the GDP growth rate nearly stagnant, at 0.29%, down from 6.0% when they assumed power. This resulted in limited business expansion and, consequently, a dearth of new employment opportunities. The former finance minister, Dr. Salman Shah disclosed that the government's footprint on Pakistan's economy stands at approximately 80%. This implies that only 20% of the national economy comprises fully private enterprises. Considering this context, the arrival of an elected government pledging job creation after the February 8 elections is likely to worsen the situation. In a frozen economy, the private sector is already struggling to generate additional jobs, and placing party workers and their families in already saturated public sector enterprises will further burden the economy.
Former Advisor on Financial Affairs, Dr. Khaqan Hasan Najeeb, insisted on structural reforms and prioritizing the agricultural sector to set the economy in the right direction. In response to the question of how these reforms could occur in the absence of political will and bureaucratic blockades, he poignantly pointed out that if we don't initiate them ourselves, our donors will inevitably enforce them – there is no escaping it. The question that lingers is how much delay will result in how much further loss!
Doesn't quite galvanize the imagination? Perhaps the following part will.
Pakistan's economic model has collapsed, benefiting only a small elite in the country. There's nothing in it for the common man.
Dr. Hasnain Javed, a distinguished economist, explained in one of our online discussions that the current stability of the US dollar is due to a frozen economy—reducing imports means the dollar stays put. As Will Rogers, an American stand-up comedian, actor, and social commentator, once said, "The quickest way to double your money is to fold it in half and put it in your back pocket." The current caretaker government has used exactly the same method to create an appearance of economic stability. This also implies the absence of any vibrant business activity or industrial expansion. When industry operates at a brisk pace, it requires machinery spare parts and oil to fuel it, both requiring foreign exchange. So, the magic wand the caretaker finance team employed was to freeze the economy – everything stays where it is, no new jobs either. When the elected government takes charge of the affairs, it will have to face a huge set of problems rather than offering any relief to the nation.
This is how it goes.
The World Bank Pakistan director, Najy Benhassine, made a poignant statement about Pakistan's economy in the November 2023 issue of Development Advocate Pakistan, a UNDP publication. According to Benhassine, Pakistan's economic model has collapsed, benefiting only a small elite in the country. There's nothing in it for the common man. This may sound like a wake-up call for those who wish to set things right, but sadly, it might remain wishful thinking, as nothing will change when the elected government takes charge. It will only get worse.
Over two hundred state-owned enterprises like PIA, Pakistan Railways, and PTV benefit the bureaucracy and the politicians alike. The bureaucracy benefits from these projects through lucrative postings to run these corporations in key positions, whereas politicians can favor their friends and family by getting them jobs in these places, among other benefits. This is how and why both political parties and the bureaucracy have their fingers dipped in this sauce, which they enjoy together. And that is precisely why no serious effort is made – or will be made – in the direction of privatization by these forces. When pressure builds from donor agencies like the World Bank and the IMF, they make the whole process appear sluggish or unprofitable, making it seem better to leave things as they are.
In light of discussions with Pakistan’s leading economists, one thing becomes certain: the post-election economic scenario is bleak. Furthermore, no political party seems to have presented a workable roadmap to address this situation, let alone putting forward a competent team to implement it.
Revealing the ten-point manifesto for the imminent elections, Bilawal Bhutto, the Chairman of the Pakistan People’s Party, asserted his commitment to the abolition of 17 ministries. This strategic move is aimed at reducing the burden on the federal budget following the PPP’s commitment to the 18th Amendment, where most of those 17 ministries have become a provincial subject. This will also mean cutting the red-tape to size and hence rectifying the historical error made by the founding Chairman of his party, Zulfiqar Ali Bhutto, who initiated the nationalization of businesses and industries in 1972. Since then, Pakistan’s economy has been ensnared in bureaucratic complexities, impeding the establishment and operation of businesses and industries. The elimination of ministries will alleviate the economy of unproductive offices, a demand consistently emphasized by donor agencies, if it at all happens.
In light of discussions with Pakistan’s leading economists, one thing becomes certain: the post-election economic scenario is bleak. Furthermore, no political party seems to have presented a workable roadmap to address this situation, let alone putting forward a competent team to implement it. This implies that, despite the readings and wishes of political pundits in our media world who pay little attention to how politics is inseparably linked to the economy, the next government will struggle to meet the challenges and expectations of an already desperate populace in this country. Their woes will be compounded by the disenchantment likely to linger after these elections, in the absence of PTI's leadership on the political map.
All this leaves one wondering about the thoughts of the individuals behind the wheel.
At the risk of repetition, I can't help but reiterate that the next government, regardless of its form or color, will find itself dealing with the IMF right after assuming office – notwithstanding the hefty $77 billion repayment of loans by 2026. Following that, it will face the challenge of curbing food inflation in the month of Ramzan. To add insult to injury, the summer-time electricity demand will make the first six months seem immeasurably exhausting before it hits the rock in a frenzy.
So, where does it all lead?
Is it incumbent upon the nation to brace itself for another electoral event in the year 2025? The elucidation of such a prospect shall manifest definitively within the inaugural quarter of the impending democratic setup.
“We must not make a scarecrow of the law, setting it up to fear the birds of prey, and let it keep one shape till custom make it their perch and not their terror.”
------ Measure for Measure, Shakespeare