There is no doubt that major political parties are ignorant of the major issues confronting Pakistan in the next few months. Yet, once in power, the hands-on challenges will revolve around ‘Backdrop of US Policies in Region’, ‘Economic Development’ and ‘Water’. Within days the lofty promises made to the electorate will evaporate into the thin mountain air, where the steep ascent, thin air and obstacle will strain tissues, willpower and alertness to the extremities. Unlike team sports, this will be a lonely ascent with no feasters to cheer the leader.
Pakistan is already in an economic quagmire. The seriousness of the situation is still not understood. It has taken international manipulators and homegrown economic hitmen over 15 years to frame this scenario. The caretaker government has done nothing to address the situation. In fact its composition suggests a continuation of the policies followed since 2003 that became more damaging after 2008. The nation hoped that with Shamshad Akhtar at the helm, something would change but it is more of the same.
The first challenge will be to wade through the crises of Current Account Deficit (CAD). The latest figures released by State Bank of Pakistan (SBP) indicate that the deficit expanded to an unprecedented $15.96 billion during till May 2018. The major cause has been unprecedented imports, less exports, and consumerism. Imports alone widened the deficit by 13.4 percent. By limiting imports and pushing the exports, this deficit could have been reduced by at least $ 7 billion. This was not done as it was not the intention. Due to energy crises and bad policies, the manufacturing sector did not grow; rather went into negative.
The second challenge will be repaying foreign debt to a tune of $ 8 billion. Unless some part of this debt is rescheduled, Pakistan’s reserves will be pushed to the limit. Remittances by Pakistanis could account for$ 13 billion leaving a gap of $13 billion.
The Sharif Family and coterie of political businessmen control the largest segment of consumer economy. PMLN government should have made efforts to scale down this deficit by $7-8 billion. Faced by corruption scandals and vengeance, it had no desire. The CAD has been deliberately manipulated to multiply Pakistan’s external and internal problems.
The political economy of creating an unmanageable CAD and economic recession is not difficult to unravel. Dawn Leaks, propaganda against Pakistan’s armed forces, attacks on the federation and pro Afghan and India themes, provide crucial linkages to how and why it has happened. There are already murmurs that Pakistan may have to go to IMF. This is just what the doctor’s ordered. Imagine a nuclear power with serious differences with USA in Afghanistan, the looming Damocles of FATF Grey List, charges of abetting terrorism and waist deep in Hybrid Warfare with a begging bowl. Should Pakistan’s policy making once again be held hostage by a desk officer of US treasury?
To compound matters, climatic changes and unpredictable monsoons may once again create floods whose water cannot be managed. The entire national activity will be disrupted. If this happens during the peak election campaign, than postponement of elections may remain the only option. Most, it will dilute attention towards Pakistan’s most pressing problems of economic management.
No political party in Pakistan has framed these hypotheses and war-gamed them to a credible solution. State institutions that always made back-up plans are politicised and no more effective. Political party manifestos will promise the moon with no plans or teams to implement them.
But all is not lost. Pakistan has unprecedented capability to wade through crises.
Pakistan faced similar self-created crises in 1998-99. By 2001 Pakistan had waded out despite international sanctions. The economy started moving and foreign exchange reserves began to build up. Pakistan was out of the woods and IMF gridlock. By 2003, a team of economic hitmen led by Shaukat Aziz was hitting back. Pakistan’s Canola Oil project was shut down. Industrial policy was discouraging. Clean drinking water project was made complicated and impractical. Agriculture research was discouraged. Reorganised PSO became a bull in the china shop. Consumerism peaked and by 2007, everything was reversed. Most of the political cadres who managed this down slide are still effective as electable in political parties. They are most likely to pursue their dreams rather that a Naya Pakistan.
IMF assistance should be a last and desperate resort for a shortest period of time. Maybe not more than 2-3 years. Pakistan, somehow should try to cough up the 13 billion deficit through its own means and bid farewell to IMF within 2 years.
First, freeze all PSDP and infrastructure projects till suck time the CAD situation improves. The government should rather concentrate through its municipalities and police to address everyday problems of its citizens. This will provide some breathing space to new economic managers.
Secondly, the government must endeavour to reduce the import bill by $ 5-6 billion in the first year. It must introduce tariffs and policy on import of unnecessary luxury goods like vehicles, cell phones, textiles, air conditioners, jewellery, cosmetics, fruits and vegetables etc.
Thirdly, the exports must be boosted by at least $ 2 billion in the first year. It must also follow a strict policy of import substitution with incentives.
Fourthly, the government must introduce a strict austerity drive and trim most non development expenses.
Above measures are likely to impact resource constraint by over $ 8 billion, enough to address the CAD within the first year.
Agriculture sector has been neglected for past decade. Yet it remains the back bone of economy and one that can give a kick start to the economy in shortest time. Agriculture policies must become farmer friendly before Kharif season so that Pakistan can produce bumper wheat crops by April 2019. Imported BT cotton varieties must be replaced by Pakistani varieties that are more productive and resistant. Sugar industry from farms to the last production line needs to be monitored and regulated. Import of fruits and vegetables must be banned or taxed heavily.
Also on farm and onsite water management has to be improved. Dredging of canals, provision of water to tail ends and reclamation of lands fallen prey to water theft by bigwigs must be top priorities. Within a year, Pakistan is likely to have an agriculture surplus that shall boost the GDP by at least 2-3 %. Considering that the present CAD is about 6 % of GDP, Pakistan with a proper intent and hard work can produce a surplus within a year.
These are some aspects that the caretaker government should already be working on. Being a continuation of the status quo, they would most likely aggravate and palm off the problems to the next elected government.
The next prime minister will most probably be a lonely warrior. He will lead a team of ministers who have already been party to plundering of riches and part of Pakistan’s malaise. The climb to the summit will involve a test of sinews, imagination, determination and loneliness. Drained, exhausted and parched, he must reach the summit.
The writer is a political economist and a television anchorperson.