Pakistan must fix house for economic growth

KARACHI:

The recent statement by US Under Secretary of State Wendy Sherman to India that the visit to Pakistan is “a very specific and narrow goal” and “we do not see large-scale relationship building” is another signal. alarm for those citizens who still sleep in the fantasies of glory.

Our history is a combination of times when outside powers have needed our help or not. We have relied too much on being “accepted” or “wanted” by others. This must change. The strategic interest of the United States for the 2020s is mainly focused on harnessing the political and economic power of China. Thus, the military agreements between the United States, the United Kingdom and Australia (Aukus) or the existence of QUAD (United States, India, Japan and Australia) or Five Eyes (United States, United Kingdom , Canada, Australia and New Zealand).

In the midst of such political realignments, we can’t expect to be on the American camp or expect major economic partnerships – unless the eye sockets shift otherwise.

Pakistan is at a crossroads for the umpteenth time. We have become addicted to foreign aid in our quest for a global position. Militarily, we have climbed the ranks with one of the best defense and intelligence systems as our fighter jets are in demand around the world.

Economically, the story is not at all rosy. Pessimism is a direct function of our inefficient use of skills. If there had been no talent in the country, there would have been neither frustration nor hope. All is not lost.

In relative terms, Pakistan has been blessed in the post-Covid world that the government has not spent a huge amount of stimuli compared to developed countries creating debt worth 10-15% of gross domestic product ( GDP). It is an advantage for Pakistan.

However, the rise in the commodities cycle is once again jeopardizing our short-term gains and exposing our weaknesses. Priorities need to be shifted from elections to catching up with peers. Bangladesh, Vietnam and the Philippines are moving forward with envy.

It’s time to look inside. Put the right people in the right job. Technocrats and bureaucrats must work together to solve the country’s structural problems.

If circular debt reduction requires controlling theft, line losses, and privatization, then do it. Don’t waste three years in brainstorming alone.

If the management of the pension burden requires a reduction in benefits for the military and civilians, pass it to defined contributions. If increasing tax revenue requires tackling traders and undocumented migrants, then clean them up in a structured way with affordable taxation. Don’t give in to political pressure. If industrialization forces the richest 1% to invest in the country, then control their wealth which is parked in unproductive real estate, driving prices to astronomical and unaffordable levels.

If the country’s food demand increases, increase the fertile land and focus more on doubling the yield to achieve the best standards. If we don’t have a naphtha cracker to refine the crude for chemicals, then create an environment in which investors can invest funds.

If refineries are needed because of the demand for fuel, then stick to the political agendas and go for it. If milk production is less, find innovative ways to create an exportable surplus and export value-added goods.

If our universities are not up to global standards, then make it your mission to have 10 of the top 100 universities in the world. If our unskilled workforce could be used productively for data entry globally, then teaching people the skills of tomorrow and paying them to learn and take on overseas projects. .

If our startup culture is taking shape, the government must massively encourage entrepreneurs to create the unicorns of tomorrow. These are some of the measures that need to be accelerated. With each passing year, our neighboring countries are developing at a faster rate and our economic relevance is diminishing. There has to be a sense of urgency among policy makers to get the job done quickly. The recent change in NAB laws is a welcome sign that would encourage faster and more efficient decision-making. However, a few dozen people cannot rotate all the strata of 220 million odd people. It is humanly impossible to expect cabinet members to make all the decisions.

Civil service reforms have failed to bring tangible improvements affecting the life of the common man, as the past three years have been marred by the depreciation of the rupee, the Covid, and high commodity prices. The next two years would be difficult as the PTI fights for re-election. Yes, some tough decisions would be delayed to protect political capital. However, long-term structural issues should be resolved from today if the PTI is to have sustainable GDP growth of 5-6% between 2023 and 2028.

It’s time to do the job ourselves. It’s good to be friends with the United States or China, but no nation has ever experienced prosperity unless it fixes its house.

A majority of Pakistanis are poor – let’s ignore PBS statistics for a while – and live below the family income of Rs 40,000-50,000. Policy makers should either give up or work towards a goal of people passing buses to bikes and bikes to cars. Obviously, a lot can be done and is very much doable.

The writer is an investment specialist with a keen interest in political economy

Posted in The Express Tribune, October 18e, 2021.

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