I believe most will agree that 2020 posed economic challenges which were unprecedented. Pakistan’s economy was barely stabilising when Covid-19 hit us and posed health, economic and food crises. No political government is trained for such times and leadership is expected to rise to the occasion and respond with compassion.

To the credit of the government and the central bank, relief was provided when it mattered most. Against an estimated annual loss of Rs 2.5 trillion due to the pandemic, the government put forward an additional budgetary spending of Rs 600 billion to support small and medium enterprises (SMEs), exporters, daily wage workers, agriculture sector and low income families. A relief on fuel prices to the tune of Rs 50 billion was allowed. A health spending of Rs 75 billion by National Disaster Management Authority was allowed apart from the allocation of Rs 100 billion emergency fund to combat Covid-19.

To keep the worker layoffs to a minimum, risk-sharing facility under the refinance scheme was mobilised for SMEs. For trading enterprises, Rs 100 billion worth of accelerated tax refunds were allowed. Another Rs 100 billion covered the power and gas charges deferral.

Credit is also due to development partners, including the International Monetary Fund (IMF) for their timely assistance and supporting budgetary requirements during emergency times. The G-20 countries also allowed a debt relief and extended it further. This not only helped provide timely relief locally and procure essential health and food related requirements from abroad but also ensured balance of payments stability in the country with current account balance turning surplus.

The remittance also allowed for a decent buildup of foreign exchange reserves and supported informal segment of the economy and rural families whose members are working abroad. As the lockdown was eased there was a recovery in large scale manufacturing and exports. The textile and garments sector was also able to repurpose and scale up pandemic-related needs including exports of PPE. Even in the non-traditional export segment, pharmaceutical and healthcare businesses informed us how the pandemic acted as an incentive for them to investment in getting certifications from abroad and start exporting part of their output.

While the above-mentioned are much desired outcomes, it is still unclear how economic managers plan to deal with price hikes and job losses — two key issues that affect the poorest of the poor. Inquiry reports explaining wheat, sugar, oil, cement (to name a few) supplies and price volatility debacles are out. Little is known if these inquiry reports will prompt action with exemplary punishments for those involved (including entities whose shareholders sit with the incumbent party).

Many would argue that Covid-19 allowed governments across the world to hide their inefficiencies. Attention of the masses moved away from major socio-economic challenges and towards saving lives. To some extent, the same may be true for Pakistan’s federal and provincial governments. For example, major structural reforms promised under IMF’s extended fund facility went on a backburner.

The lack of agreement on power sector reform, electricity tariffs, tax revenue mobilisation, autonomy for regulators and a credible plan for loss making state-owned enterprises has delayed putting the Fund programme back on track. On top of this, development partners and long-term investors are attaching a lot of importance to Pakistan getting off the grey list of Financial Action Task Force (FATF).

The year 2020 is also leaving us with various challenges which may not go away even during the next year. To start with, while the forex reserves buildup is a welcome sign, it is still not enough to provide for the growth needs of our private sector. For example, private enterprises are increasingly finding it hard to make foreign currency payments abroad. Foreign investors say taking their profits out of Pakistan involves various complexities. A divestment could take an even longer time. These challenges continue to persist due to the lack of confidence in the sustainability of forex exchange reserves - and this will continue to act as a constraint on growth of private enterprise.

Covid-19 will eventually leave the country with high levels of external debt. We will in the medium term continue to borrow from one country (read China) to payoff the others (read Saudi Arabia). Even before the pandemic, Pakistan’s external debt was on the rise and was recorded at $78 billion in June 2020. Only in the fiscal year 2019-20 $4.5 billion was added.

We should be mindful that the lending ability of bilateral and multilateral partners is now constrained as advanced economies slash aid budgets and look to protect lives and livelihoods in their own countries. Pakistan’s reliance on commercial sources of debt, carrying much higher rate than the concessional loans stands at almost 18 percent of total external debt. This could increase as incidence of the pandemic prolongs.

As Pakistan approaches donors for more support amid the second wave, the latter are concerned about the weak effectiveness of public spending. They point towards out preparedness and response plan (PPRP) - prepared to seek pledges from donors. The plan of action came with a significant delay and due consultation was not undertaken with community and civil society organisations from across the country.

The donor coordination mechanism - necessary to avoid delays in response from abroad and any duplication of programmes was not in place both at federal and provincial levels. This ultimately resulted in delayed disbursements of Covid-19 emergency funds at all tiers of the public sector.

The pace of second phase of China Pakistan Economic Corridor (CPEC) has also slowed down. The relevant standing committees in the parliament are best placed to inquire about this matter. The civil and development work on priority Special Economic Zones (SEZs) was at one point envisaged to be completed by 2020. The Joint Working Group meetings continued to face delays. Now there is indication from Ministry of Foreign Affairs regarding how a dispute between the NTDC and the Chinese firm responsible for Matiari-Lahore transmission line could result in a slowdown in assistance from China and have wider diplomatic implications. The private sector from China continues to complain of the regulatory challenges which Board of Investment has already identified under Pakistan Regulatory Modernisation Initiative (PRMI).

There will be economic costs of political instability seen during 2020. If proceedings of Pakistan Democratic Movement turn violent the negative impacts on the economy could be unprecedented and will eventually weaken trust of potential investors and development partners. Amid the war of narratives, there are weak signs, if any, to indicate that Treasury benches are sincere in approaching the Opposition for a dialogue and bring the parliamentary workings on track.

The reform of Federal Board of Revenue remains high on the government’s agenda. However, a lot of time has now been lost as frequent changes in leadership at this important institution did not allow for necessary change in tax policy and administration. While the number of filers has increased, more people are seemingly submitting their forms with nil tax liability. Such individuals and enterprises remain bold and confident to practice avoidance and evasion. The complexity of tax filing, high tax compliance costs, arbitrary audit methods and weak risk-based assessments have also contributed to this trend.

The PIA plane crash in May 2020 once again instigated debate on the fate of loss-making enterprises. Lately, the privatisation plan for Pakistan Steel Mills has attracted much fury in the media. The government’s privatisation agenda, if there is one, doesn’t come across as a very coherent plan. Most public assets could not be structured in a manner that could attract significant interest from local and foreign players. It will be timely to evaluate if experiments such as the Sarmaya-i-Pakistan Limited, a holding company for loss-making public sector enterprises have delivered the desired results.

In January 2020, the Privatisation Commission announced that investors from the United Arab Emirates, Qatar and Saudi Arabia were interested in buying major public assets. We have no information if there was any follow-up on these leads. There is also no mechanism in the government whereby the relevant institutions approach the investors who visited and then did not decide in favour of investing in Pakistan.

With a little over two years left with the PTI to prove its worth to the voters, there is no forward-looking medium-term strategy which informs citizens and investors with regard to government’s economic growth priorities. As the prime minister embarks on signing performance delivery contracts with various ministries, it is worth mentioning that during all this time in power its Ministry of Planning, Development and Special Initiatives hasn’t been able to finalise the 12^th Five Year Plan; the Ministry of Commerce has not delivered the Strategic Trade Policy Framework; and the Ministry of Industries has not finalised the much-touted National SMEs Policy.

Our institutional gaps are not new-found. They were there when the PTI government formed over 40 task forces to effect change. Such task forces were also constituted by provincial governments in Khyber Pakhtunkhwa and the Punjab provinces. There must be some reports prepared by the well-intentioned individuals in these task forces. It could certainly help if relevant ministries and departments could make these reports public and revisit the ideas presented.

The writer is an    economist and a former civil servant. He tweets @vaqarahmed