A tumultuous year

The year 2019 started with clouds of despair and uncertainty hovering over the country’s economy and politics. It ended with much of the same – except that we have now mastered the trick of deluding ourselves into thinking that some miracle will save us in 2020. Let’s first count the good things that unexpectedly happened to us during the last year.

On February 26, India by hitting an unknown place deep in Balakot near Kashmir, calling it a ‘training facility of JeM’. The next day, the PAF responded resolutely with more precision and downed an Indian fighter plane in the operation.

The brief skirmishes could have flare up into full-scale war had it not been for some important countries that helped diffuse the situation through economic diplomacy and strategic clout. For India, it was not less than a debacle and a morale booster for Pakistan given the fact that India is several times bigger in size and, unlike Pakistan, has no major economic woes.

The stupid action of Modi in Kashmir vindicated Pakistan internationally. India suffered a heavy blow to its secular and democratic facade with PM Imran Khan winning laurels by releasing the captured pilot unconditionally and talking peace at the UN General Assembly. India’s attempts to isolate Pakistan by blaming it for cross-border terrorism boomeranged after it usurped the fundamental human rights of Kashmiris. It was for the first time after 9/11 that the world paid attention to Kashmir as the flashpoint between two nuclear armed neighbours.

The year 2019 doesn’t, however, deserve to be celebrated for what happened inside Pakistan. The historic devaluation of the rupee not only added to the debt burden but also led to cost-push inflation. Approaching the IMF, which Imran Khan had always said he despised, remained the only option to manage the current account deficit and avert an imminent default. As always, the IMF demanded increasing taxes, reducing subsidies, and liberalizing the exchange rate regime.

The economic meltdown that had started in Pakistan before the PTI government had taken over was somehow, albeit for the time being, stopped with the help of financial support from friendly countries, a bailout package from the IMF, and stringent fiscal controls. The stabilization measures taken by the government, however, have caused massive unemployment and inflation. All these measures severely hit the middle class, put a brake on economic growth, and increased poverty to unprecedented levels.

One reason why the current government failed to deliver as promised was its poor preparation for the gigantic task put on its shoulders. Imran Khan had no prior experience of running the country and had no good understanding of the conflicting interests of different stakeholders. Faced with a largely lethargic bureaucracy, intrusive powerful players, inquisitive judiciary, and parasitic businessmen, the hypersonic prime minister started blaming the previous governments for every ill in the country.

Given the complexity and magnitude of various challenges, it would be naïve to expect too much from him or, for that matter, from any other leader in 2020 as well. The year will go one step forward in one area and two steps back in another area. This is how each year defines our fate. Cracks have already emerged in the coalition and it seems that it will not be a smooth-sailing for the government both in the centre and in Punjab.

If Imran Khan really means what he says about the state of Madina, he needs to work on institution building as has been done in developed countries. The economy cannot be fixed as a stand-alone project. Politics and economy are twins – they grow together.

Slogans and rhetoric of accountability, appeals for taxes, and inspirational speeches will not make any difference to a faltering economy and a poor governance system. Sustained and systemic reforms are needed for any long-term results.

The writer teaches at SZABIST, Islamabad.

Email: dr.zeb@szabist-isb.edu.pk