In Pakistan, polarization and rhetoric are at their peak and many conflicts abound whilst a terrifying brain drain and flight of capital are underway.
With the recent IMF SLA, we have narrowly averted the threat of a sovereign default. However, it is critical now that we focus on a long-term plan for meaningful economic reform that will help prevent such a situation in the future. But first, we must introspect. Why have we landed in this situation? And beyond what’s apparent, for example the numbers, we need to get a sense of their true determinants.
We tend to predominantly debate the dismal statistics — deficits, inflation, growth numbers, interest rate, etc. These, however, are symptoms of the problem, just as fever can herald infection and persistent cough can signal cancer. When you deal with a patient, one must diagnose and treat the underlying disease, not just the symptoms; similarly, beyond the economic numbers, it is imperative we ascertain their determinants.
To this effect, economists have been drawing attention to structural problems, our import-dependent economy, our investments in non-productive sectors, the focus on consumption versus investment; our dollar denominated sovereign debt, the tendency to artificially control the exchange rate, the persistently low tax-to-GDP ratio, the lacking ease of business ecosystem, lack of global competitiveness, the overall lack of an enabling environment, poor governance, and so on and so forth.
However, it must be appreciated that these ‘structural problems’ are manifestations of deeper issues. I believe the most salient of these structural problems is the lack of accountability, which pervades every level of government in Pakistan today. I realized the extent of this rot when I first served in government as a caretaker federal Minister in 2013. After my term, I wrote a paper in The Lancet titled ‘Reflections From my Tenure as Minister’ (https:// www. thelancet.com/journals/lancet/article/PIIS0140-6736(14)61284-8/fulltext) about my understanding of the government’s limitations and fault lines.
It was eye-opening to find that in Pakistan, the government is simply not set up to perform. In installing the government, we focus on processes — elections, cabinet selection, and key appointments — but not the attributes which truly matter for the government’s performance: namely, accountability, incentives, and performance measurement.
Although these three are intertwined and accountability has several dimensions bordering on the financial, administrative, legal, and political realms, the rest of this piece will focus on one aspect of accountability, which is the lack of answerability for actions, which I consider one of the root causes of government malfunction.
Let’s take the present state of the economy as an example. On the revenue side, we lament the persistently low tax-to-GDP ratio, but we cannot hold tax functionaries accountable for not taxing many holy cow sectors and not deploying data analytics to catch habitual evaders. My experience with catching 820,000 BISP fake beneficiaries leads me to believe that this can be done easily with data triangulation using CNIC as the peg.
Decision-makers have consistently encouraged consumption over investment and savings and have prioritized investment of aid in non-productive assets. No one is ever held accountable for busting the ceiling of the Fiscal Responsibility and Debt Limitation Act repeatedly, especially for loans which were spent on non-productive politically motivated assets.
No one has ever been made answerable for the massive politically motivated human resource hirings, and procurement rent seeking which has made public-sector enterprises non-viable incurring hundreds of billions in losses annually which need to be underwritten by tax-payers money.
There has also been a failure to deploy ease of business, e-tendering, and privatization reforms. Transparency reforms, to enable electronic filing and public expenditure tracking were not institutionalized to track pilferages from the system. Yes no one is ever questioned for the damage done and losses incurred in the process.
The list can go on and on. Explore every problem and it will be rooted in the lack of accountability — the energy sector, which has been deliberately designed to run in loss; foreign policy decisions that fostered terrorism; decisions which entrenched circular debt in many sectors; in attention to water availability and land use; the trillions which are channeled in untargeted subsidies from which the affluent benefit. Every sector has an institutionalized pattern of collusion by design.
I wrote about the systematic collusion in the wheat value chain in these columns on May 6 (https:// www. thenews.com.pk/print/1067410-wheat-policy-imperatives). No one has been held answerable for the loopholes and the lack of oversight in this regard. Shockingly, tax evasion and money laundering has also been structurally ingrained, through loopholes in tax laws. No one is answerable for that.
Unfortunately, even the deepest governance reform to-date — the 18th Amendment to the constitution — failed to address certain key issues needed for transparency reform, such as political party finance, conflict of interest and accountability within government, despite the broad-based changes it introduced in the entire state system.
There are more recent glaring examples of the way the lack of answerability has been damaging for the country. For over a year, there were many warnings of an impending sovereign default, yet the IMF deal was delayed for months. Or for that matter, how will you hold the coalition of thirteen parties accountable for speedily legislating on matters that are widely perceived to further their own interests but failed to come together in the interest of water security and other critical needed governance reforms over the last seven decades.
No one will be held accountable for dismantling Ehsaas Rashan Riayat and poorly executing free atta distribution, killing innocent people. Last year’s catastrophic floods are also a case in point; since 1929 there have been several studies on Hill Torrent Management in Pakistan and laws are in place mandating river management, yet these norms have not been implemented. The flood water created havoc largely due to unchecked encroachments, construction on outflow canals and katcha areas and poor construction of public infrastructure. But no one will ever be answerable for the damage done.
Public officials can get away with wrongdoing with impunity. In fact, the same people get rewarded with prominent positions in public office, repeatedly. When you remove answerability from the government’s performance equation and make answerability synonymous with politically motivated personal vendettas and combine this with wide discretion for officials, a culture of arbitrariness in decision making, bureaucracy which is rewarded for political leanings, plus strong monopoly power, vested interests of the elite, loopholes in laws and norms and a shocking tolerance for failure to comply with norms, one creates the perfect recipe for disaster.
Accountability reform to ensure transparency, responsibility, and answerability has many facets but at its core is rule-based control on government functioning. Straightforward things such as respect for merit, integrity and ethical conduct, oversight of discretionary powers, checks and balances, establishing robust financial management and audit systems, and reform of institutions such as the Public Accounts Committee and the office of the auditor general of Pakistan can go a long way.
We all agree that the ‘fundamentals’ need to be fixed and that we need a ‘structured plan to reform the economy’ but without attention to these foundations, we will keep going round in circles.Dr Sania Nishtar, "Where no questions are asked," The News. 2023-07-07.
Keywords: Political science , Political issues , Foreign policy , Terrorism , Transparency , Pakistan , GDP , BISP