111 510 510 libonline@riphah.edu.pk Contact

An economic doomsday?

Economy is the most important aspect of a modern state’s life. Pakistan faces an unprecedented and deep economic crisis. There is no hope of its quick recovery. It seriously threatens Pakistan’s security and well-being. This state of the economy is the result of several decades’ criminal negligence and an attitude of dependence on foreign governments for military and financial aids and also due to wrong economic policies of successive military and civilian governments. It is indeed strange that some of the renowned and finest economists, who did wonders in other countries, failed to plan and build Pakistan’s economy on sound foundations. General public is also to be blamed for their extravagances. They are largely spineless and lack the will and courage to rise up for their rights and against corrupt and incompetent governments.

Now, with the regime change, after a failed experiment of a hybrid system, efforts are under way to borrow more money and beg for economic assistance from friendly states to avoid ensuing multiple defaults. But due to a volatile and fast changing international political and economic scene, coupled with an untrustworthiness, financial mismanagement and shenanigans of Pakistan’s ruling elite, it seems that China or Saudi Arabia would not help out this time. The US, the IMF, World Bank or any other financial institution would not help Pakistan due to its unreliability and fallen credibility as it has been greatly isolated by its enemies.

All economists believe that this crisis is bound to aggravate. They agree that any short and long-term measures, based on best economic planning and management are bound to fail due to political uncertainty and interferences from the establishment. There is only one way to come out of this crisis viz. by putting the house in order and fundamentally changing several policies and behaviour of the establishment and a consumer culture. The following steps need to be taken without wasting any further time:-

(a) Political truce and stability: Jinnah and his Muslim League, with the votes of millions of Muslims, did not create Pakistan for the establishment, religious fanatics and selfish politicians. The present state of affairs that has brought Pakistan to the brink of a collapse and being declared a failed state is the result of infightings, intrigues and manipulations by different powerful classes that have created monopoly over the state resources and power structure. A divided house is an invitation to the enemies for destruction. Existing political leadership did not grow from the grassroots. It was mainly raised by the establishment. Coming from the top, this ruling elite does not believe in serving people or exercise power as a sacred trust. With this state of mind and political behaviour, their infightings and abusive language that has become a routine, democratic culture could not grow and take roots. It is therefore critical that all political parties immediately declare a truce and sit down to form a national economic policy to take country out of this mess created by all of them.

As a step towards this objective, the establishment must stop its interference and let three mainstream political parties and their leaders to sit together. All television channels should immediately stop telecasting negative speeches, debates, discussions and news that promote hate. A policy of conciliation should be encourage and belligerent behaviour from political leaders must be stopped. Since everyone is equally responsible, therefore, they must not pretend to be angels and blame others. They should workout and agree on an agenda to take Pakistan out of this economic crisis. Mian Nawaz Sharif is the senior most and experienced leader. He should be allowed to come back and cases against him and other political leaders must either be closed or adjourned sine die to be decided after all things settle down. Politicians should rise to the occasion as they did fifty almost years ago when this Constitution was framed and adopted. Moreover, the Election Commission, Supreme Court of Pakistan and electronic and print media and other state agencies should come forward to develop a national consensus on this issue. A national Government was formed in the United Kingdom during the Second World War.

(b) Redefining the role of establishment: Power dynamics in Pakistan is a constitutional aberration. Constitutional deviations once accepted as a temporary measure became a permanent feature and proved counter-productive and a part of the problem rather than the solution according to political and economic experts. The business of the government, according to the Constitution, is to be run by the elected governments. The defence of Pakistan and the protection of its territorial integrity is the only legal and constitutional duty of the armed forces and to act in aid of the civil power as provided under Article 245 of the Constitution. Federal Government that is empowered to raise and maintain armed forces is responsible to provide all material and financial support according to the state resources. For several historical and other reasons the military and civil establishment have been the architects of the security, economic and foreign policies of Pakistan without the benefit of any useful inputs from the civilian leaders. It is time to re-think, redefine and change security paradigm of Pakistan in the light of new economic, geographic and political realities for which there is no harm in holding a dialogue between civilian and military leadership to redefine the role of the establishment.

(c) National cohesion: Pakistan cannot achieve economic and political stability without attaining a national cohesion for which several steps need to be taken to strengthen the faltering federation. There is a great raison d’ etre for Pakistan to be a strong federation. It is imperative that non- dynastic political parties of national stature and having pluralistic and multi-nationalities representation are allowed to function and promote national politics. A discontent at the verge of an armed insurgency that is taking lives of soldiers, officers and estranged and misguided civilians must end. Those up in arm against the state are debriefed and granted amnesty once they surrender to the state. Pakistan is virtually in a state of war since two decades. It has hugely disrupted political, social and economic life. No army can fight its own people and no politics can be allowed on prejudices, hate and anti-state activates. There may certainly be many foreign hands involved, be it Balochistan or any other places, which must be fought out with all the might, but before that Federal Government that now represents almost all nationalist elements, must make all out efforts to encourage dialogue and stop wrong policies that alienate those elements. The state has never engaged with a common man on the road and old colonial policies for these areas were continued. There is no better way than educating the youth of those estranged areas and by engaging and integrating them in the national torrent and provide them opportunities of jobs and livelihood and access to national resources. This will end deprivation.

(d) Harnessing religious extremism: In an inter-dependent world there is no place for religious extremism particularly when financial system of the world is located and controlled from western capitals. It is generally believed that since the Soviet-Afghan war of 1979, the state has promoted religious extremism. A mushroom growth of hundreds of seminaries was allowed to continue during the last four decades that did not permit and promote human capital to develop for more useful and better purposes. Resultantly, Pakistan’s image as a progressive and moderate country as it used to be in the sixties and early seventies of the last century got terribly undermined and defaced and provided a convenient handle to its enemies to isolate Pakistan. The continued presence of Pakistan on the grey list of FATF, loss of market in the Europe and the Middle East to India and other countries may have to do with this image. It is thus high time to change this policy. Turkey and many other Muslim countries have maintained a balance between religion and state affairs.

(e) Tax reforms: Taxes are the biggest source of the income of a state. There is no tax culture in Pakistan. A common man does not pay tax because he believes that his tax money is misused and he does not get anything in return. There is no quid pro quo in taxation. When tax money is expended by state officials extravagantly and on luxuries then a common man will become disenchanted. The rich and powerful does not pay taxes. Pakistan has one of the lowest tax bases in the region. The system promotes tax evasion. Whenever there are some efforts made to reform taxation system there is a resistance from several quarters. There is a great potential for tax collection provided there is a will to do it. Several tax amnesties during last five years have provided data and information that can be used to bring millions of people to the tax net. But no outsider is allowed to head Federal Board of Revenue (FBR). Bureaucracy, a relic of the Raj, still thinks that this it its exclusive domain.

(f) Financial emergency: Financial emergency is envisaged by the Constitution. It may add to an economic uncertainty and discourages foreign investments and send wrong signals to the lenders. But the data of last several months shows that foreign investment has dried up and the state of Pakistan’s economy is well known to the international community. A financial emergency will control and divert state resources towards more emergent needs. If used this power with care and caution in the interest of economic life, financial stability and credit of Pakistan by enforcing principles of financial propriety and other necessary measures taken to save money for repayment of debts and lessen burden on the treasury, including reduction in the salaries of state officials to a bare minimum to pay off debts. Governments should not be allowed to build their vote bank on public money. Moreover, it makes no sense when there is practically a state of emergency bonuses are being given to state employees who even hardly deserve their salaries while hundreds of million forsaken are clamouring for one time food. State officials living in close vicinities to their workplaces must take the lead and stop using separate cars and security vehicles. Actual austerity measures need to be taken to take Pakistan out of this crisis. Leaders are made by character and not by dresses.

(g) Independent accountability process: National Accountability Bureau (NAB) was created by a martial law regime and the Supreme Court for no just reasons exempted many institutions and officials from its operation. Its performance is disputed across the board. NAB needs to be immensely reformed and converted into a National Commission for Accountability whose head should be appointed by the Federal Government with the advice and consent of a parliamentary committee after a public hearing. There should also BE a board comprising honest persons from private and public sectors, selected on the criteria set out for the Boards of public sector organizations and companies. NAB’s primary task should be to supervise, control and guide provincial and federal agencies tasked with accountability of public officials. No private individuals and transactions should come within the scope of accountability. There is a general belief that while it may have achieved some good but it harmed economic activity in Pakistan by discouraging initiative. NAB must work in coordination with constitutional institutions like the office of the Auditor General of Pakistan and FBR to contribute to the larger national causes.

(h) Reforming electoral system: The biggest threat to the democracy in Pakistan is the shady, manipulated and doubtful electoral process. Last three elections were particularly disputed and led to marches. Election Commission needs to be made independent and non-controversial. Moreover, system should be plugged to stop interference from the establishment.

These are few steps which by no means are exhaustive if taken with a will, sincerity and conviction can turn around Pakistan’s economy, put it on the right track and lead to its financial independence and avoid a doomsday in future.

Muhammad Waqar Rana, "An economic doomsday?," Business recorder. 2022-05-13.
Keywords: Economics , Economic policies , World Bank , Tax culture , Tax collection , Tax reform , Economy , Security , Mian Nawaz Sharif , Pakistan , China , Saudi Arabia , India , IMF , FBR , US , NAB

Leave a Reply

Your email address will not be published. Required fields are marked *