IF members of the cabinet believe they can pin the economic failures of the government on their finance minister, Mr Hafeez Shaikh, they should think again.
The finance minister is right to point out that the failures are something for which the government needs to take ‘collective responsibility’.
After all, under whose watch were unrealistic promises given of ending loadshedding by Dec 31, 2010? Under whose watch were the controversial rental power contracts signed, one of which just had to pay up $17 million to NAB in order to be able to quietly slink out of the country?
And who’s taking responsibility for the telecommunications ministry today, which has failed to even arrange a consultant for the 3G auction that has been delayed by over six months now, and on which the government has been relying for an impressive $800m inflow to help stabilise a deteriorating external account?
There is no other way to put this. There has been a large-scale and collective failure to run the affairs of this country by the present government, and that failure cannot be pinned on any one individual.
If cabinet members are finding it hard to face their voters because of this failure to govern, they should find a better narrative to hide behind than ‘it’s all the finance minister’s fault’.
This is well-intentioned advice, because if you think about it, blaming it all on one minister raises another more troublesome question: why did you retain this minister if his track record is so bad?
There are two areas that have most directly constrained the ability of the finance ministry to be able to address the country’s growing economic difficulties.
One is the National Finance Commission Award of 2010, which has seen transfers to the provinces rise to more than Rs800 billion in the last fiscal year, leaving precious little fiscal space left for the federation. The finance minister has complained on more than one occasion that the Punjab chief minister has more resources to play with than he does!
The other major constraint has been the power crisis, which is almost entirely out of the finance ministry’s control. Who is going to hold the ministries of water and power and petroleum accountable for the numerous failures to stem losses, to manage dwindling supplies of gas or to arrange future supplies?
We’ve had too many abortive attempts to start the process for construction of an LNG terminal, too many line losses in the electricity distribution companies, too much money absorbed by the power bureaucracy without giving us any corresponding return in the form of reliable electricity supply.
The biggest problem with the finance team’s handling of its difficult position is the optimistic spin they’ve constantly tried to put on things. In the cabinet meeting where the minister came under attack for the state of inflation in the country, for example, the anger was prompted in large part by the rosy take on inflation that the finance minister had just presented, which sought to declare victory in the government’s fight against inflation.
The minister ought to know that of the entire constellation of economic forces that operate in any society, none is so intimately a part of people’s living experience as prices and inflation. It is the most important yardstick by which people measure a government’s performance — justly or not being a separate matter.
Whenever budget time rolls around, for instance, the one question on everyone’s mind is always what items are going to become cheaper.
One can tire of explaining to the people that the government doesn’t set the prices of things the way it used to, but to no avail. The market is far too distant and disembodied an entity to have a place in people’s imagination. And prices, by contrast, are far too close and intimately experienced a reality to be left to abstract terms.
In most people’s mind, prices are something like the expression of an epic struggle between good and evil, between the dark forces of selfishness and avarice versus the benevolent light of charity and trust, and in our time, in our country, good almost always loses because it has few takers at the top.
That’s the gist of how economic forces are perceived in the popular imagination. It’s not so much that people are living in the past and think that government sets all prices.
Rather in their perception if government cannot be a player in this epic battle then what good is it? And if another institution of government enters the vacuum and starts ordering prices to march to its commands it walks away with the people’s trust and their hearts.
There is a vernacular meaning to the term ‘relief for the masses’ that gets lost in translation, and technocratic policymakers would probably be well served by efforts to recover this meaning.
So when people feel their purchasing power eroding, they’re not likely to find reassurance in abstract notions like ‘fiscal deficits’, and ‘too much money chasing too few goods’. And they’re likely to get quite annoyed by talk of victory in the fight against inflation. Instead they are more likely to want to know who is stealing the joy from their hearts, and who can catch this thief for them.
Prices and inflation are treacherous terrain for any politician or any policymaker in Pakistan. The language and views and priorities of government always find little traction in the minds of its constituents. That’s why it’s best for a policymaker to avoid commenting on the state of prices, except to portray it as an ongoing struggle.
The government does itself a severe disservice by allowing its finance minister to become a scapegoat for the myriad failures that are on the electorate’s mind. But the finance minister should also give more attention to how he formulates his take on things, and should present the economic challenges facing the country a little more bluntly.
The writer is a Karachi-based journalist covering business and economic policy. email@example.com