Pakistan’s economy needs to be fixed now or never?

Pakistan's economy needs to be fixed now or never

By Raza Ruman

Political writer Zafar U. Ahmed sees Pakistan’s economy in deep crisis — needs to be fixed now or never.

   “A astage has now been reached where personal, party and institutional interests and differences ought to be restrained and all stakeholders need to agree to some basic principles and policies.

The recognition has been there and there has been much talk of a charter of the economy in political circles. Yet, there has been little discussion on what the salient features of such an agreement would be. Here is an attempt to outline the broad contours of a possible charter,” Ahmed writes.

   He says Pakistan is a democracy and the well-being of all citizens is paramount; the rights and interests of all segments of the population is to be ensured, including the majority segment — the lower and middle-income citizens.

“The elected representatives will collectively galvanise public support for the steps to be taken under this charter so that the citizenry stands by the government when self-serving special interest groups resist necessary corrective actions.

Cronyism is a grave injustice and fosters an uncompetitive economy. Uncompetitive ‘cronyism’ (through subsidies, tax breaks, special access, protection from competition, etc) will be replaced with a fair and competitive market economy, but with the state taking responsibility for nurturing citizens to reach their full potential and providing social protection for the deserving needy.”

Discriminatory regulations and subsidies — which are estimated to cost more than debt servicing or defence expenditures — will be ended. If/where concessions or subsidies are deemed justified and necessary for some component/sector, then the state must receive a fair share (as proportionate shareholders) of the enterprise subsidised with the citizen’s hard-earned incomes.

He says technocrats and regulatory bodies will be selected on merit and no conflict of interest will be countenanced. They will work within policy parameters formulated by elected representatives and be held accountable for results.

Selection, advancements, postings and job tenure of government officials will be strictly on defined criteria, without reference to the wishes of influentials.

“An effective mechanism will be established for the coordination of the various components of the justice system, which currently come under different administrative units (parliament, judiciary, ministries, police, prosecution, etc). Criteria will be agreed upon for the selection of judges. The judicial administrative authority of judges (formation of benches, cause list) will be shared by senior judges.

Only the highest-priority development projects will be funded for the immediate future. Scarce international currency reserves will not be spent on the import of non-essential goods. Severe penalties will be applied for defrauding the country, such as through under- and over-invoicing.”

Ahmed says every effort will be made to import in the national currency under quid pro quo arrangements, or by trading/bartering against national production.

Unaffordable losses by SOEs will be controlled by professional reorganisation or by transparent privatisation.

“Utility pricing will be rationalised so as not to unfairly burden the poor. Distribution losses will be controlled, for instance by investing in upgrading and reducing inefficiencies, instead of passing the burden onto consumers.

The current method of ‘incremental’ budgeting generally practised by the government will be modified and, instead, plans will drive budgeting, not the other way around.”

He says the taxation system will be fair and non-discriminatory, and what is due will be collected regardless of pushback by vested interests. The tax base will be broadened to include all who ought to be eligible, including the agriculture sector. Indirect taxes will only be charged where fully explained and justified.

“The highest priority will be to bring agriculture and livestock productivity and quality at par with international standards and by improving water utilisation efficiency. The land revenue department will be streamlined to remove any hindrance to economic activity.

Exports will be raised by producing more internationally competitive products and services. Reliance on state concessions and grants of ‘favoured’ status by importer countries will be weaned off. There should be equal opportunity for all enterprises to develop a highly competitive economy through simplified procedures, no discriminatory policies and regulations, quality skills training and science education, quick dispute resolution and so forth. Overseas workers will be professionally supported as a vital part of the national economy.

The state will facilitate and regulate a fair market economy. The industry will step up from assembly to manufacturing. Exporters will diversify their export goods as well as destinations.”

Ahmed is of the view that the services sector will be encouraged to give due importance to exports. Regulatory bodies will be accountable for performing their assig­ned role effectively. Insider trading, cartel behaviour and other illegal practices will not be allowed.

Opportunities presented by CPEC will be fully availed. Besides infrastructure, Pakistan will work with foreign firms to manufacture and export products via CPEC and train workers by association with foreign experts and technology and skills transfers.

National and provincial development strategies and plans will be made domestically. Foreign supporters may offer to fund a part of these. In the future, this ought to be the model for foreign assistance, if needed.

“Balochistan and former Fata will receive special considerations and investment for their development needs to give them equitable opportunities as citizens of this country.

At present, highly educated workers have a much higher unemployment rate than the national average. When properly informed about work opportunities, after completing basic education, most students are expected to opt for high-quality, market-driven vocational skills training. Higher education institutions will cater to a more competitive student body and focus on producing the country’s requirements in science/engineering, agriculture, industry, IT and other fields.”

A productive and efficient economy requires a healthy workforce. The state will, therefore, make every effort to organise quality healthcare for all. Can it do? PAK DESTINY

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