Winds of Change

Spearhead Analysis – 11.02.2019

The much awaited winds of change are finally being felt and the march to naya (new) Pakistan has begun. A Finance Bill being dubbed a ‘mini budget’ is being implemented, a bond targeting expat Pakistanis called the Pakistan Banao Bond (Make Pakistan Bonds) has been announced to attract dollars, the UAE and Saudi Arabia have come in with massive support, a positive meeting has been held by the PM with the IMF Chief and the Saudi Crown Prince is due to visit and sign the accord for a multi-billion-dollar oil refinery at Gwadar– the terminus of the CPEC being built with Chinese support. A major factor for these developments is the untainted reputation of the PM, his resolve not to allow corruption in his government and the fact that he has no family members riding on his coat tails for favors. This a big change from the past and a new factor in the political institution. All these developments herald the first phase of an economic turn-around-that will stabilize the economy and recue it from the crisis mode in which it was buried.

The next, and much more difficult, phase will be the long delayed structural reforms that have to focus on revenue generation, review of existing trade agreements, a policy for an export led economy, policies to attract FDI (foreign direct investment) and domestic investment, banking and finance sector reforms, bureaucratic reforms, energy shortfalls, multiple deficits, PSE (Public Sector Enterprises) reforms and capacity building for the rule of law and effective governance. Simply listing what needs to be done indicates the magnitude of the task. Much more complex and difficult will be the policy formulation that has to precede the actual work to be undertaken. Fortunately, Pakistan has the expertise in the form of an experienced and competent resource base. The government functionaries doing the stabilization act are really crisis managers and fire fighters with no time for in-depth studies and the perspective planning that is required. The Economic Advisory Council that has been in existence with zero impact so far may have to be replaced by an advisory panel of experts, without government presence or oversight, who are tasked to deliver input to the government. The sooner this happens the better.

Several external factors that may buffet the winds of change need to be noted. The ongoing Afghan situation that shows signs of a positive outcome, Iran’s Chahbahar port that India plans to use to trade with Afghanistan and Central Asia, externally sponsored subversion of the CPEC by sponsoring and exploiting Pakistan’s internal situation—socio-economic, political, sectarian, ethnic and militant– and coercion along the Line of Control (LOC) in Kashmir. An orchestration of all the elements of national power will be required to meet these challenges. Fortunately, the National Security Council exists for this purpose and needs to be used to the fullest extent. The recent appointment of a seasoned and experienced Adviser on Security to the PM has been a timely step.

An understanding of the overall evolving environment if discussed in Parliament should lead to the political institution to rise above petty issues and personal judicial problems of individuals so that the focus is on major issues. Far too much time has been wasted on the blame game. Political stability will enable the media to shift from meaningless discussions and conversation to more in-depth and responsible reporting that educates opinion and projects the image of an emerging Pakistan. With the accountability process in the hands of the institutions responsible the government can use its resources to monitor its own functioning and change the environ from one of fear and extraction to the business friendly and wealth creation mode that the PM talked about in Dubai—this more than anything else will free the citizens from the clutches of a bureaucracy armed with outdated laws and a mind-set of seeing criminals and tax evaders everywhere. It’s time to move on.

(Spearhead Analyses are collaborative efforts and not attributable to an individual)