Economic year of uncertainty: the way forward
Pakistan Tehreek-e-Insaaf (PTI) came into the power last year at national and provincial level. This idea itself leads to the perception that development of a country should be on top of the agenda with priorities going in the right direction. Foundation for this was laid in the manifesto drafted prior to election 2018. Ideas at that time were very much catchy with the perception that development will take place at social and economic fronts.
Government tried and have some of the successes in this regard such as documentation of the economy for which Federal Board of Revenue is working with some steps though at this moment have declined the economic activity but can bring in positive changes in the long run. Efforts are there to bring down Current Account Deficit (CAD) which has shown significant decline. Also, there were some of the successes in managing the foreign exchange reserves though through borrowings but pressure of going into the negativities was tackled.
While looking into the steps taken by the current government, it is worth to mention that though steps were positive but are more inclined towards short run.
Pakistan being debt and import driven economy cannot stay in this position in the long run to manage debts and control current account deficit. Similarly, borrowing money from abroad has also worsen the situation in terms of domestic management of the economy. This high borrowing, meeting revenue targets and reducing gaps have led towards more inflationary policies. Within this whole scenario major thing to suffer is investment. This suffering of investment is linked to the policy guideline on which government itself was in a saddle which also led to changing faces in the cabinet and policies have to be revisited and things again came to the point 0 and economy again is dependent on the old mantra of conventional sectors and playing with numbers.
For any government to come into power, first year usually sets the base on which government sets agenda for next 4 years. This agenda revolves around both development and non-development practices including policy mechanism
The consequences of such uncertain situations are in the form of stagnant economy i.e. indicators are yet to set the course and move towards upper trajectory. Second, lack of trust of business community and investor on government policies. This lack of trust can be attributed to the fact that huge communication gap is there between government and stakeholders while taking into the account policies particularly of growth. Third, government over this period could have chalked out plans for one window operation through integrated policy approach after being there in majority of the governments across the country but no success was there as in each region including federal there was no coherence in between the policies over this whole year.
Further consequences in this regard linked to uncertainties in the policies are linked to the cut in budgets such as that of the educational budget which should have prompted the education bodies to think out of the conventional approaches, but educational institutes failed to develop themselves in this regard.
So, moving towards and bringing in more coherent approach towards governing the system and making things clear for stakeholders’ focus should be more towards coherent policies. The ruling party should come out of the perception of failure which has led to more complex system. Second, to make things work in the smooth way there is need to focus agenda on economic growth which in the long run itself will be bringing in the stability and for this growth to come reduced reliance should be on old conventional thinking i.e. of bailing out state owned enterprises which has been practiced for long now while looking into the trend.
Third, to bring in more positive change to the growth and development perspective and reduce the clouds of uncertainty in years to come, focus should be on technology and innovation industry and value chains associated to it.
Fourth, though some sectors have played significant role in the economy of Pakistan over past decades but in the current competitive environment focus need to be on the cheap use of technology instead of cheap labor.
Fifth, for easy doing of business there is need to manage regulations with higher compliance cost.
Sixth, there is need for an approach which should more focus on integration and all policies work under one roof. Policies starting from installation of business to running of business should be key ingredients of the business.
Thus, summing it up, government though have managed things somehow and survived first year with all type of uncertainties i.e. from political to social to economical focus of development in next four years should focus on economic growth leading to stabilization.
To over come the clouds of uncertainty, need is to shift thinking towards cheap use of technology and investing in new sectors such as technology will bring in more growth. Focus should be on start-ups and entrepreneurs into the technology and innovation. There is need to include such stat-ups and entrepreneurs into the ingredients of growth for long run stabilization.
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The opinions expressed in this article are the author's own and do not necessarily reflect the viewpoint or stance of SDPI.