Chronic myopia

Spearhead Analysis – 13.03.2015

By Enum Naseer
Senior Research Analyst,
Spearhead Research

Ishaq DarThe post-Cold War world is a strikingly different place:  with softer (non-military) aspects of the new security model taking precedence over harder aspects, the economic policies of nations have assumed greater importance than ever before. The current era of globalization has helped forge new partnerships and underlined the significance of interdependence and cooperation between states. In the current global context thus, developments taking place in the domestic economy have a much greater impact at the international level than before.

While the global community seems to be adapting to the changing environment, Pakistan’s sluggishness vis-à-vis economic reform is most depressing. The apparent apathy in the face of threatening domestic and global challenges is an issue of grave concern.  That even today the economy is viewed mostly in isolation and popularly thought to play a limited role in strengthening the country paints a dark picture of the future. Even during the tenure of a party that is big on economic reform and progress, there is no noticeable real improvement in Pakistan’s economic trajectory.

Much of the developments dubbed positive and encouraging for Pakistan’s economy stem out of the need for instant gratification by taking measures that are aimed at making superficial, cosmetic improvements. The national currency achieved stability on the back of heavy inflow of foreign exchange as Pakistan succeeded in making a pitch for loans and aid to donors and beefed up its national reserves. On the other hand, a crippling power crisis together with an appreciating national currency an ineffective trade policy kept the export sector from reaching its full potential. Sustainable economic progress was traded in for immediate benefits as myopic economic policy-making became the order of the day.

The ruling circles grew increasingly complacent on perceived successes; an aggressive media campaign followed communicating various accomplishments of the incumbent government. Even partially passing off the decrease in the prices of oil in the international market became something that was celebrated as a benevolent gesture. As the inflation statistic reached an all-time low of 3.2% causing economists to warn of dire consequences in the wake of persisting deflation, the lack of foresight and preparedness of the policy-making circles in addition to the role of SBP was subjected to censure. Interestingly enough, it was also pointed out that the inflation statistic—the CPI is misleading since the method of calculation with regard to assigning of weights to different variables is questionable. If the very composition of the statistic rules out the possibility of arriving at accurate results, it is mind-boggling how the government can take credit for alleviating the woes of the poor and downtrodden even if the trends in the undocumented economy are left out of the picture.

Merely using catchphrases such as ‘overhauling’, ‘bringing about a turnaround’ will achieve little besides harming the credibility of those running state affairs as they repeatedly miss chances at setting the house in order. It is important, thus to reiterate that executive action be aimed at addressing these issues so that the country can look towards reaping persisting dividends of  effective economic policies. To add to this, there are no guarantees that if the government musters the resolve to take hard decisions aimed at course correction, its policies will be received well by the electorate. Swallowing the bitter pill today only seems like a viable proposition if the intention is to aspire towards a better future. Reiterating Pakistan’s problems time and again and finding excuses rooted in political instability of yester-year reeks of defeatism. A biopsy has already been conducted to arrive at a conclusion, the next step is intensive chemotherapy. At the end of the day, it all verily boils down to political will, the absence of which will only deepen the country’s prevailing crises.