Navigating unchartered territory

By Afshan Subohi
Published in Dawn on April 10, 2023

The politics in Pakistan have entered uncharted territory. Perhaps it is the novelty of the situation, besides the conflict within and without institutions, that has consumed the power wielders at a time when the stark economic crisis is destroying lives and livelihoods and punishing investors who trusted the country with their capital.

“If record high inflation threatening food security, historic low valuation of currency eroding the value of assets, paucity of foreign exchange paralysing the import-dependent industrial base leading to massive retrenchments and alerts of vertical economic slide from the World Bank and the Asian Development Bank did not shake the political elite in and outside the government, jurists and generals, one wonders what would,” remarked a young lady entrepreneur while discussing options of relocation abroad, in an informal chat.

The global development partners have projected GDP growth in the vicinity of under one to two per cent, down from 6pc last year.

Commenting on the way forward, many thinking heads either excused themselves or offered nothing worth quoting beyond expressing disappointment/despondency.

Even amongst the economic turmoil, some see a glimmer of hope with support from Saudi Arabia and other allies

A senior economist, who heads a think tank, sounded nervous. “The persistent crisis has now assumed its own momentum. All solutions are shrouded with problems. The recovery, if and when it starts, will be a long winding road. Will the government be able to contain the boiling mass discontent and deliver relief and hope before it spills on the street? My guess is as good as yours,” he declined to own his comment.

“The long, painful wait is about to end. The International Monetary Fund (IMF) Programme revival is on the cards. Saudis have informed the IMF about its intended $2 billion support to Pakistan, and UAE assurance is a matter of days. The Iran-Saudi rapprochement will offer rich dividends. China has little choice but to offer the needed support as it can’t afford to let its closest ally in the region sink.

“I think the gravity of the situation will force politicians and others around a table to agree on a consensus election programme to start the return journey towards normalcy,” said a self-proclaimed incorrigible optimist associated with the futures market.

Commenting on world-renowned economist Dr Atif Mian’s recent tweets predicting Pakistan’s bleak future, another analyst said: “such high-profile professionals have been away from the country for too long to understand our nuances and the complex reality. By the text books, the country should already be in a civil war.

“The situation is far from sound, also reflected in the sharp rise in street crimes, but defining the situation as a ‘total breakdown’ would be incorrect. We have seen worse. The horrors of repeated terrorist attacks are not forgotten. The parallel economy may not be thriving, but it does lend resilience. We emerged back stronger in the past and would again.”

Top business leaders tied to the country with high stakes sensed heightened risks and responded swiftly to the request for their take. Instead of expressing bare angst or handing down their regular laundry list of demands, they offered advice on key steps to wade through choppy waters.

Dr Rashid Amjad, former vice chancellor of the Pakistan Institute of Development Economics who currently teaches at Lahore School of Economics, was also hopeful. “Economic problems are not insoluble, but all measures to reignite growth and bring down historically high inflation rest on bringing back business confidence which in turn rests on a political settlement between the govt and opposition.

“That said, ensuring food security through anticipating wheat losses due to untimely rains, making import control measures in place more transparent, and better short-term economic management based on thought through policy initiatives are the three important measures that need to be adopted.”

Dr Vaqar Ahmed of the Sustainable Development Policy Institute was direct: “Stop non-essential public sector development programme/annual development programme and divert funds to social protection for mitigating impacts of inflation.”

Saquib Shirazi, President and CEO of Honda Atlas who sits on multiple boards of directors and has been leading the private sector from many forums, spelt three steps in order of priority to wriggle out of the current trap.

“First, cut industrial unemployment by allowing raw material import gradually to avoid further factory shutdowns. Second, support the rural economy through targeted cash subsidies and ensure fair wage increases in the urban sectors. Third, in the medium-term tax net must be broadened, and the gentrification of state-owned enterprises and energy reforms are necessary.”

Ehsan Malik, CEO, Pakistan Business Council responded thus: “The most urgent action needed is to ensure availability and affordability of food in general and wheat flour in particular. Expansion of Benazir Income Support Programme to include the “new-poor”, and direct cash transfers, accompanied by an adequate supply of essential food items, where necessary, from the neighbouring countries.

“We must do whatever it takes to restore the IMF programme (by securing assistance from friendly countries). Reprofile debt to create space for industry to revive, unemployment to recede and supply shortages to be addressed.

“Hold elections to give the government a long enough tenure to address the fundamental flaws in the economy which result in Pakistan ranking at the bottom of virtually every socio-economic measure in South Asia.”

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