ISLAMABAD, May 4: Almost all mainstream political parties have done a ‘commendable job’ in preparing their election manifestos highlighting critical economic issues that need to be addressed immediately, but most of them have not clearly highlighted ‘expenditure rationalisation and reduction agenda’.
“The convergence of all the manifestos on attaching priorities to the critical areas shows that the political parties are aware of the gravity of the situation,” says a study released here on Saturday by the Pakistan Institute of Development Economics (PIDE).
This is indicative of the fact that political parties have paid heed to policy advice coming from the Planning Commission, says the study titled ‘A socio-economic assessment of manifestos: election 2013’.
According to the study about the parties’ take on socio-economic issues, tackling the energy crisis is among the top agendas of almost all the manifestos.
To resolve the energy crisis, the parties have suggested various measures, including one-time settlement of circular debt, public-private partnership to build dams, reducing cost of production through better governance and management, and appointment of professionals in the energy sector.
The parties have presented solutions to the country’s debilitating fiscal situation. They have vowed to increase the tax-to-GDP ratio and reduce the fiscal deficit besides promising to limit government borrowing.
Specifically, the solutions include reducing the incidence of indirect taxes, introducing agriculture income tax, granting operational independence and autonomy to the Federal Board of Revenue, rationalising tax rates, curtailing expenditures and revamping and privatising of PSEs (public sector enterprises) to bolster tax revenues. All the major parties have also promised to do away with SROs (statutory regulatory orders).
The study, however, shows that most of the parties have not clearly highlighted the expenditure rationalisation and reduction agenda and that due attention has not been given to the Fiscal Responsibility and Debt Limitation (FRDL) 2005 Act, which is important because it introduces measures to ensure fiscal responsibility.
All the proposed measures are doubtlessly needed but it is unlikely that such measures alone would increase GDP growth, says the study.
Though, it would create much-needed fiscal space but for low fiscal deficit and high tax-to-GDP ratio to translate into sustained economic growth much more is needed. There have been repeated calls for reform of the civil service (bureaucracy) but little has been done so far in this area.
The assessment of the manifestos shows that each political party has come up with different ideas about reforming the governance and civil services structure.
Other measures highlighted by the parties are decentralisation of service delivery to the district level to improve efficiency, devolution, result-based management and monetisation of all perks.
The parties are hopeful that they will be able to achieve high rates of investment, once they come to power. The proposed measures include tapping all those government sector investment opportunities which attract private investment and liberation of small-scale industries from bureaucracy. Other salient steps outlined by the parties to boost investment are the ease of credit facility and provision of infrastructure to boost growth, and building of special economic zones.
It is apparent from the manifestos that almost all the major parties are very serious about building new infrastructure, be it roads, dams, schools, or industrial zones. It is hard to deny the fact that investment in infrastructure is vital as it leads to employment creation.
At the same time, such visible projects help to improve the scorecard of the political parties. However, Pakistan’s chequered economic growth shows that physical infrastructure has not consistently contributed to economic growth and development.
The study concludes that the political parties have undertaken elaborate efforts to prepare their manifestos. However, there is a need for a clear articulation of the underlying macroeconomic framework that will ensure consistency of the proposed economic policies and their outcomes.