The most effective criterion to assess the overall performance of a government is how the lives of the common people have been affected
In recent years, efforts to measure the performance of governments have expanded across the world. These efforts are more systematic in developed countries. A government’s performance is assessed mostly against standard outcome indicators through robust methods. In developing countries, such as Pakistan, these efforts begin and end with politics of performance. Government claims to have done the best. Opposition finds nothing good.
The absence of any standard criteria and methods leaves room for positive or negative bias. One can pick indicators of performance showing improvement and compare those that give the desired results. The first and foremost point, therefore, is to choose the criteria for the assessment. Broadly speaking, we can have three criteria.
One, where does the government stand compared to what it promised before and at the time of taking power? The manifesto of the ruling party may help. However, there may be a problem when multi-party governments are formed. In this situation, the commitments of the majority party may serve as guiding indicators.
This takes us to the most used criteria, the status of the economy when the government took charge and at the time of assessment. A fair assessment must involve at least a two-stage process. First, the choice of the performance indicators; what are the indicators of performance? And what is the baseline, the comparison? It should not be a random pick as is the practice in many developing countries. The government picks its best-performing indicators and compares those with the worst in history, without any rational justification.
The most important part of an assessment of economic performance is how we interpret it. A subjective interpretation can lead to false claims. Take the example of reduced current account deficit over the last two years. The CAD narrowed down by 78 percent in FY-2020. Governments are inclined to take it on face value. So it is in Pakistan. The government is highlighting taking it as its biggest achievement. An objective analysis, however, shows another picture. The reduction in deficit has been the natural outcome of the contraction of economy; from 5.48 percent annual growth rate in FY-2018 to 1.9 percent in FY-2019.
The deficit will again inflate once we move to higher growth; it is unsustainable. And the achievement has imposed heavy social and economic costs. The manufacturing sector has recorded negative growth for two consecutive years. People have lost their jobs. Poverty has increased. This was the case even before Covoid-19 emerged in Pakistan in March. Also, recovery of taxes has been limited mostly to taxes on petrol and energy products. This has a direct bearing on the living of the common man. Increased inflation added to the revenues as well, the so-called inflation tax.
A ready assessment of the two years of the PTI government is not very encouraging. Inflation reached double digits, increasing from 5.07 percent in 2018 to 10.58 percent in 2019. It reached 14.25 percent in January 2020.
To avoid such subjectivity around government performance on the economic front, one must not limit oneself to the face value of selected performance indicators. Also, macroeconomic numbers must not be taken as an end objective of the measure of performance of any government. These are just a tool to improve the life of the common man.
The numbers like the current account deficit and revenue collections, therefore, must be judged against what are the foundation of the improvement; what are the costs that the country and its people had to face for this improvement or what are the net gains and how sustainable the improvement/achievement is? Any improvement which is based on ad-hoc foundations and is unsustainable must be clearly identified and separated.
This brings us to the most important question; what is then a better criterion to assess the performance. The most effective criterion to assess the overall performance of a government is what has happened to the lives of the common people; are they better off? This shows the outcome of macroeconomic indicators criteria as well. The government is doing good if a common man has improved access to basic facilities of life, including but not limited to health, education, food, opportunities to make livelihoods and living a safe and peaceful life have increased or improved.
While there can be an unending list of indicators one can pick to assess, three key indicators which a common man cares about are inflation, unemployment and poverty. If these three indicators show improvement, the government must be happy. So shall be the people. They must believe that the government is doing what it must be doing. An assessment based around this triad can debunk claims made solely on the basis of deficit reduction and revenues.
An assessment of the two years of the PTI government from this perspective is not very encouraging. Inflation reached double digits, increasing from 5.07 percent in 2018 to 10.58 percent in 2019. It reached 14.25 percent in January 2020. After a dip because of the lockdown, monthly inflation increased to 9.3 percent on year-on-year (YoY) basis in July 2020, from 8.6 percent during June 2020, according to Pakistan Bureau of Statistics (PBS). Food inflation surged exponentially.
Without getting into the much discussed performance of the government over the last two years, the broader message is that the assessment of performance must be aimed at providing basis for better decisions-making. It must improve policy-making, design and implementation. For this, we need to have a more robust, systematic and efficient assessment of a government’s performance. Currently, the performance assessments are biased and of little help in drawing policy lessons.
This article was originally published at: https://www.thenews.com.pk/tns/detail/710477-the-politics-of-performance
Approved By SDPI