Points to Ponder

Spearhead Opinion – 31.10.2018

By Farrukh Karamat
Senior Research Coordinator, Spearhead Research

The nascent PTI-led government has managed to create yet another controversy where none was required – by transferring the Islamabad Inspector General of Police on the ‘verbal directive’ of the Prime Minister of Pakistan. The flimsy grounds for the alleged transfer – the IGP had refused to take action on the complaint of Federal Minister Azam Swati’s son and had failed to take calls from the Minister. This is reminiscent of a by-gone era when the PML-N stalwarts ran the country like their personal fiefdom. As usual the Information Minister was issuing confusing and conflicting statements to explain the position of the government. Again this is eerily similar to the belligerent spokespersons of the last government. The Supreme Court has stepped in and suspended the transfer orders. For now sanity has prevailed, but this incident has put another dent into the fragile façade of the present government.

It would seem that the PTI-led government, hard-pressed to deliver on its tall pre-election promises, is becoming prone to creating controversies, back-tracking on its statements and appearing to be clueless in the art of governance. Nearing the end of the 100-day milestone that the government set for itself, there have been spates of incidents and decisions that have put a question mark on their ability to govern objectively and deliver on the promises.

The key requirement is to jump-start the sagging economy and the expectation being built up since the Caretaker government took over was that Pakistan would have to approach the International Monetary Fund (IMF) for a bail-out package. This was in stark contrast to the electioneering claims by Imran Khan that he ‘would rather commit suicide than borrow more’. As a result, after assuming the reins of power, faced by the twin deficits, dwindling reserves, falling exports and rising imports the government has been in a dilemma as to how to rescue the economy. The Prime Minister is scrambling from country to country trying to leverage his position and garner the much-needed funds to bolster the economy. Saudi Arabia has magnanimously provided a life-line with the placement of a deposit and agreeing to deferred oil payments. UAE is expected to offer some similar concession; and hopes are hinged on China to provide some additional relief. Malaysia might join the list of friendly countries further easing the financial pressure on Pakistan. The multi-country relief packages are but a short-term respite for an economy that requires major structural and prioritized reforms. Given the scale of the deficits and the fiscal requirements it is a bygone conclusion that the government would have to seek a bailout from the IMF. Yet, again the government is delaying the inevitable and issuing conflicting statements, creating further confusion in the markets.

It is essential to revive the fortunes of the ailing industrial base through facilitating the establishment of import-substitution and export-oriented industries. This would provide the much needed impetus for attracting investment, creating employment opportunities, restricting outflows and gaining much needed inflows. The emphasis needs to be squarely placed on developing a value-added export base. Bangladesh has been able to achieve remarkable improvement in its exports, which as of FY2018 amounted to US$36.66 Billion. The forex reserves of Bangladesh are also north of US$30 Billion. Remarkable achievement in a short span of time and one that Pakistan needs to learn from and perhaps replicate. There is also a dire need to come forth with a long-term policy and plan to restore the confidence in the financial markets and attract much-needed foreign direct investment. The repeated references about creating an Islamic Welfare State might sound good, but for now the country lacks the resources to implement such a system.                  

Perhaps one of the biggest impediments facing the PTI-led government is a bureaucracy groomed and nurtured by the PML-N and PPP governments over the past many years. It can be expected that hurdles would be created to cause delays and possibly mislead a government that has little to no experience of managing State institutions. This is possibly the single most serious threat facing the PTI government in terms of delivering on its promises, and one that needs to be overcome at the earliest through a steep learning curve.

The aggressive and abrasive attitude of the Prime Minister and an impression of an emphasis on a Witch hunt policy is likely to shake what little confidence the investors have. This was a time for adopting a conciliatory policy to attract investment, while quietly instituting regulations and laws for ensuring accountability and transparency in future. If the government continues to delve into the ills of the past it would find itself mired in difficulties with little chance of any meaningful material benefit. There is a need to look to the future and ensure that the mistakes of the past are not repeated through eliminating the loopholes within the system.

In terms of priorities, the Education sector needs drastic revamping to provide effective and efficient learning aligned with the goals of an industrializing economy. Population control measures need to be adopted to address the issue of a burgeoning mass of people. Healthcare facilities need to be upgraded and expanded and made accessible to all. The under-performing and bleeding state owned enterprises need to be privatized. These are priority areas that would take years to improve and it is essential that a comprehensive plan is put into place to start the process. It is well and good to cater to optics to create an illusion of change, but at the moment the country needs real reforms to revamp a failed system.

For now the people are experiencing higher inflation with increases in the cost of utilities and food; a depreciating Rupee; higher cost of living; and a higher interest rate environment. The inflationary trend coupled with the frequent ill-conceived decisions of the government supported by feeble clarifications is tending to raise the level of despondency amongst the people. It is time for PTI to address the real issues objectively and in a transparent manner by charting out a comprehensive plan to end the lingering uncertainty. The opposition perhaps rightly points out that the PTI appeared to have had all the plans in place when they were pointing out the shortcomings of the PML-N government, but the emerging reality is starting to appear different. There is hope that at the end of the 100-day self-imposed deadline the government will have completed its due diligence process and will reveal the plans that will address the shortcomings within the system and propel Pakistan forward.