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Subdued response to daunting challenges

May 27, 2013

FOR all it’s worth, getting a huge mandate was not that difficult given the daunting challenges facing the economy.

Post-election, the prime minister-to-be Nawaz Sharif is more cautious than upbeat, holding on to his vows for later.

The pledges younger brother Shahbaz Sharif made during the election campaign of ending the energy crisis soon have been withdrawn, this being an uphill task. He has already declared the government’s coffers as empty, his warning tone synchronising with the unusual move taken by the caretaker setup to raise revenue.

On the other hand, the wide-margin victory of Pakistan Muslim League-Nawaz (PML-N) at the hustings does raise expectations. The bazaar is abuzz with talk about the return of the business-friendly politicians at the helm, even though it is yet to be seen if traders are as collectively behind the industrialist as they were at the time of another huge mandate in 1997.

Besides raising expectations of the business community, the victory has increased Nawaz Sharif’s responsibility to deliver on his promises of fixing the economy, Sikandar Mustafa, chairman of the Pakistan Business Council (PBC), a body representing about 40 of the country’s largest business groups and multinational corporations, tells Dawn.

Others agree. “Nawaz Sharif’s responsibility to deliver has increased manifold with the large mandate people have given to the PML-N. There will be a lot of pressure on him, especially with Imran Khan also in competition (in Punjab),” argues Chairman, All Pakistan Business Forum (APBF), an alliance of mostly medium to large enterprises, Syed Nabil Hashmi. “Unless energy supplies are increased, tax reforms executed and governance improved, it will not be possible to resuscitate the economy,” he argues.

Chairman, Management Association of Pakistan (MAP) Syed Yawar Ali adds a cut in the government size and public spending, elimination of cash subsidies, and privatisation of the state-owned enterprises (SOEs) to the list of the tasks the next government is required to undertake soon.

Throughout his election campaign the PML(N) chief had been urging the voters to return his party to power with a majority so that he did not have to forge coalition with other political parties. A coalition, he repeatedly pointed out, proved weak and could not implement tough decisions needed for economic recovery.

An acute energy crisis, falling tax revenues, rising debt, fiscal and current account deficit, sluggish growth and deteriorating security conditions will be key challenges facing Nawaz Sharif and his party immediately after forming the government.

Overall, the business community feels that Nawaz Sharif will deliver on his pledges but warns him against implementing short-term quick fixes at the cost of long-term economic stability. “We are looking for intelligent, bold and politically difficult decision from Nawaz Sharif. He is an experienced industrialist who has become wiser over the years. Given the enormity of the challenges, Sharif will have to move swiftly,” says Hashmi.

Many feel that Nawaz Sharif has no option but to succeed. “I’m happy that he has got such a big mandate. His strong mandate will help him take difficult decision without having to accommodate his allies and giving in to their demands as was the case with the previous coalition led by the Pakistan People’s Party (PPP),” says a Lahore-based businessman who did not want to disclose his identity.

He adds the stock market had been rising for some time now on polls predicting Nawaz Sharif’s victory in the election. “The benchmark KSE-100 index has made new records by crossing 21000 points after the PML-N won with clear-cut majority. It represents the business’ confidence in Nawaz Sharif and his policies. If he does not move fast and deliver on his promises despite a big majority in the National Assembly, it will be very bad for the economy and people,” he insists.

The businessmen think that the economic problems are too big to address in the first 100 days. Yet, they say, the new government must outline its policies and initiatives in the next budget to give a direction to the economy. “Once you have set the direction and put right policies and people in place, it becomes easier to implement them later,” Ali contends.

Sources in the PML-N admit that the challenges facing the economy are enormous and demand undivided attention of the next government.

“There is no doubt in our mind that the economic challenges facing the government are enormous and public expectations are high. But our leadership is working day and night to find solutions, and to determine a timeframe for implementing them,” says a person who was part of the PML-N committee that wrote the party manifesto.

The party has already set up various committees to study different issues and come up with their short-term and long-term recommendations to tackle all the problems, he says. “The next budget will mirror most of our economic policy preferences and set the direction in which we want this economy to move,” the PML-N leader says, seeking to dispel any impression that the party will back out on its pledges made with the voters.