TALKING POINTS: THE slide seems unstoppable…The government’s hopes of sealing the IMF deal and the promise of a bailout from friendly countries have yet to be realized. The specter of default stares us in the face…
Both the government and the opposition seem to agree on the severity of the situation but blame each other for the crisis. With the reversal of their respective roles, the narrative has also changed. Just a few months ago, while in the opposition, the PML-N was out on the streets protesting against the spiralling cost of living and accusing the PTI government of selling out to the IMF.
But now in government, the PML-N leaders’ tenor has changed completely. Inflation is being driven by rising international commodity prices, we are now told. External financial support is deemed critical to prevent insolvency. While conceding that the increase in fuel and electricity prices will stoke inflation, the finance minister contends that the measures were necessary in order to reverse the devastation caused by mismanagement in the past four years.
Miftah Ismail’s budget speech echoed the PTI finance ministers’ accusatory rhetoric blaming successive governments for the mess. He has promised to put the economy back on track. While warning of tough times ahead, he has pledged to set “strong foundations of economic development that is based on sustainable growth”…
It is a familiar mantra that was adopted by previous finance ministers as well. It is certainly a very tall order given the short span of the government’s term. The budgetary proposals are not very different from the previous ones except for some change in emphasis and the tweaking of taxation measures…
…The budget document also reveals the predicament of a government trying to meet IMF requirements, with an eye on the coming elections. Giving the narrow political and fiscal space available, there is little room for initiating any structural reform. In fact, it is more a matter of how to manage the economy and prevent an economic meltdown….It is all about keeping the failing economy afloat with external support. That has been the story of our economic policy over the decades, irrespective of who has been in power. Any claim of wizardry seems far-fetched.
…This has been a vicious cycle from which the economy has never come out. It is more of a political problem that has put the economy in a perpetual state of crisis. No wonder we have the dubious record of approaching the IMF for a bailout 22 times. Rarely have we completed the program.
…There has never been any serious effort to carry out fundamental structural reforms to put the country on the path of sustainable economic growth. We remain largely a rentier economy dependent on external help, with little incentive to break the shackles.
…for the absence of a long-term reform strategy needed for sustainable economic growth…there is a need for continuity in policy. That can only happen if all political forces agree on some basic charter of economy.
Source: A recent opinion piece ‘Politics of Economy‘ by Zahid Hussain in Dawn
A Leather Company and Pak economy (Irshad Salim, Aug. 2020)