Economy is widely recognised to constitute two-thirds of any politico-economic arrangement and its impact contains the potential of disrupting best of political ambitions. The current scenario in Pakistan is a classic example of inept understanding of economic considerations compelling the ruling apparatus to devise self-defeating shortcuts. The fast-eroding credibility of the dispensation is primarily due to complete naiveté of its leadership with even basic principles of economic management. The intricacies of fiscal movement are not easy to grasp and they become an extreme liability for a team having no inkling of their basics.
The fault-lines became dangerous when two mini-budgets were presented unnerving the business environment and fuelling inflation. The out-of-budget steps taken were more disastrous as they were viewed as deviously undertaken and the burden shifted to regulatory officials. The radical dip in the price of rupee resulted in capital fleeing swiftly and drastically increasing the cost of living. It was probably assumed that the initial goodwill generated by new dispensation will provide cushion to the economically dreadful measures.
The cumulative missteps resulted in international financial agencies downgrading Pakistan’s financial viability and adding to the woes of the business sector. The central bank echoed the downturn by painting a bleak picture of future economic prospects further enervating the economic activity. There perhaps was no need to prevaricate on IMF bailout harnessing debilitating uncertainty and suppressing fiscal atmosphere.
The prosperity or slackening of economic situation is not entirely dependent upon addressing foreign exchange reserves but it also is dependent upon many other factors. There appears to be no coordinated effort to take into account other aspects of economic management. The actions taken up to now indicate that the decisive impetus of governance was arranging foreign financial resources. Cutting down government expenditure appeared to be playing to the gallery as was witnessed by allowing expensive foreign tours for members of elected representatives.
The easy solution of obtaining loans from banks is clearly in vogue and may negatively tilt the financial balance. Moreover, this practice has strong limitations and may drain resources of indigenous banks and financial institutions. It must be realised that the money deposited in banks is ultimately the property of the account holders and cannot be freely obtained. Hiking prices of gas has burdened people and cutting back subsidies on sectors of public welfare will increase general discomfiture.
The seed money doled out for extensive housing scheme may not prove beneficial but will add to the long list of wasteful expenditure.
It is urgently required that the burden of economic pressure may not be shifted by raising the smokescreen of accountability and NRO giving-and-taking. Both these issues have been whipped enough for public satisfaction and may become completely ineffective if pursued further. The necessity is of overhauling the economic team and composing it with experienced economic personnel.
There are many economic experts within the government sector who have been trained in international financial institutions on government expense. The fad of hiring so-called economic wizards should be discontinued as most of them are economists with dubious credentials gaining credibility by intense public relations and getting their pieces printed in newspapers that are mostly cut-and-paste stories. It should be borne in mind that governmental fiscal arena is very different than corporate financial aspects and any attempt to fit the square into a whole invariably fails.
It is also required that utmost transparency is brought into financial matters because any ambiguity gives impetus to half-baked commenting that does more harm to economic managers. People are already very skeptical about all actions taken by governments in Pakistan and hardly give credence to official proclamations. It should be realised that the extremely propagated economic dream-team fielded in the arena proved equally inadequate disappointing even its diehard supporters. The dream-team looks more oriented in fighting political battles through populist tongue-lashing than devising cogent financial plans.
The situation is still open to control though it requires sincerity of purpose. The emphasis is required to be changed and without further ado. The initial setbacks may be reversed once lateral thinking is applied to economic environment. The process may begin by carefully balancing the external factors with internal potential. Serious efforts are required to prop-up stock markets as they are essential for much needed capital formation. It is equally important that the fate of wasteful state-owned enterprises is also determined one for all.
The delay about this particular issue is compounding the economic difficulties. There is always an opening provided determined efforts are made to locate and exploit it. TW