Poverty and dependence

LAHORE: Pakistan's economy faces a persistent malaise, echoing the same economic woes that plagued the system at the turn of the century. Cartels still operate with impunity, and public sector enterprises incurring colossal losses remain awaiting privatization.

The economy dances to the tune of foreign inflows, soaring when they rise and plunging into depression when they stop. Whatever meager growth occurs stems from consumption, not genuine economic development. Greenfield projects have dried up, and poverty, while fluctuating over the past two decades, currently sits at its highest level in 20 years.

Pakistan rarely enjoyed a comfortable level of foreign reserves but lately the country is operating its affairs on very low reserves. Pakistan’s current foreign exchange reserves are hardly enough to finance less than 45 days average import bill. And we have suppressed the imports to almost half to preserve the foreign reserves. The GDP in the past two decades averaged less than 4 percent. Last five years GDP growth averaged less than 3 percent including the peak growth of 6 percent in 2022-23. Pakistan for the first time posted negative growth in its history during the pandemic.

Power consumption in the past five years remained at the same level as in 2018. The industrial growth has sharply declined. Agricultural growth also remained anemic. Stocks however crossed historic high during this gloom that is puzzling.

This history should be a guide for the next elected government. Many issues and their solutions have been identified by domestic and global experts. All the past governments lacked courage to go for transparent solutions to the issues because that affected influential vested interests or the interests of the ruling elite.

The most lethal instrument that rulers and higher bureaucracy enjoy is the discretionary powers that they enjoy under which they could bend the rules, allow waivers from duties or relaxation in age and qualification for any post. This creates distortion in the economy and denies a level playing field to businesses and job seekers. Besides, it results in appointments to higher posts without merit. The ruling party could get rid of these discretionary powers through the parliament that would resolve a major portion of the nontransparent policies. After discretion is abolished appointments, postings and transfer would be on merit just as in the army. The bureaucrats and rulers would be accountable for any illegal practice.

The SROs would no longer be issued. The sugar barons would not be let off if they start the crushing season late nor would they dare to delay the payments of the cane farmers beyond the prescribed limit. They would also not get huge subsidies to export sugar that they generally get after a year or two.

Someone would have to think beyond the next election to introduce much needed reforms. We need not only tax reforms but also sweeping reforms in the tax machinery. We need complete documentation to ensure money trail of every economic activity. We need custom reforms to curb wrong declaration of goods and under invoicing. Economy cannot be improved through a single reform. All economic aspects must be covered in one go when we know the problem as well as the solutions.