Economics, politics, and personalities are often inseparable – Charles Edison. So is the case of Pakistan, which has witnessed a strong synergy between economy, politics, and personalities in the past few decades. The reflection of the strength of any country depends on its economic status, which has now become a huge challenge for Pakistan to cater. Despite being a resourceful country, Pakistan has remained in a perpetual crisis-mode. Poor governance and political instability, among other factors, has contributed to widespread poverty and stagnant economic growth. It is the burning need that polity prioritizes converting Pakistan’s geostrategic location into an asset. The key for this is good economic governance and economic stability which can only be achieved through economic synergy between institution and all political stakeholders.
The world has witnessed foreign conspiracies in many countries. One of its components is economy. The point which is significant for us to ponder upon is whatever we are facing today in terms of economic crisis is somewhere limited with foreign hatched conspiracy or with our inability to cater the balance between exports and imports, our inability of controlling the soaring dollar rate, or our inability to expand our tax base. I think, later one is a more relevant fact. According to Pakistan Bureau of statistics the annual inflation rate in Pakistan increased to 13.8 % in May 2022. It is the highest inflation rate since January of 2020. Increased levels of inflation with low levels of employments have added to grievances of a common man.
We have learned a lot about the new terminology through domestic media that is “Charter of Economy”. But is it viable? What are the cardinals of this charter? Although the common understanding is that charter of economy seems to be the sustainable way out as it talks about a broad political consensus among major political parties on how the economic policy should look like, yet it is utopian idea given the extent of political turmoil Pakistan is currently facing. Thereby, the current government must push Pakistan towards path of sustainable and inclusive economic growth, meanwhile dialing down its confrontational rhetoric. The political stakeholders must set aside their political differences at this time of grave economic crisis and realize that political infighting comes at a greater cost which is mostly paid by ordinary Pakistanis.
Fixing two or more economic variables on macroeconomic chessboard is not enough to fix the current problem. In a diverse country like Pakistan where the society is profoundly connected with everyday politics and desperate for change, it is important to have a creative, functioning, and reliable governance system which can pursue an economic policy consistently and wisely. Pakistan needs a consensus at the civil society level as well as on the political level. At grass root level, Pakistan must translate its demographic power into substantial social progress. Reducing grievances of people will make them less prone to the information warfare Pakistan is facing. On national level, serious structural reforms are needed to put the economy back on track. Politicians must understand that IMF’s mission is not growth and development of the state, it’s responsibility of the government. IMF merely helps the state in its balance of payment problems.
Furthermore, to achieve macro-economic stability, few immediate corrective measures need to be taken that includes reducing subsidies, halting artificial depreciation of rupee against dollar by restoring confidence in market, broadening tax net, and formulating set of interventions in agriculture, energy, services sector to boost the economic growth. Pakistan’s federal and provincial governments should also improve production and investment in private sector. Entrepreneurship must be encouraged. Provincial governments must cooperate in this regard. Parliamentary committees must be created to overlook the economic policies and these committees must be held accountable to parliament. Moreover, government must ensure that the economic growth is inclusive of all classes of the society, as John green has rightly said: “Economic growth means nothing if it’s not inclusive”.
Stabilizing economy should not be a matter of party affiliation, but a common ideal ground for all political actors. This vicious cycle of political instability is now creating further more polarization. There is a dire need for strengthening the federation and providing high level political and policy guidance to the political actors.
That brings us to the bottom line, the villain is ineffective economic governance. Beneath the intense ongoing political tug of war, the fundamentals of economy fabric of Pakistan remain the same, however, the prospects are always there to come out of the crisis. Political reconciliation is need of the time and a prerequisite for economic recovery of cash-strapped Pakistan. The preliminary steps would no doubt be difficult, but they are not impossible. Structural reforms followed by Political reconciliation and charter of economy is the way forward for Pakistan economy otherwise facing a Sri Lanka type situation is not out of possibilities.
