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PTI’s economic message

August 09, 2018

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AS an exercise in managing expectations, the message sent out by Asad Umar of the PTI at a news conference on Tuesday is timely. Nobody should expect revolutionary changes at the outset of the new government’s term, he seemed to say. The fact that these expectations have been built up by the party’s own campaign, however, is difficult to miss. It is possible to see the news conference as an attempt to manage expectations, or as a face-saving way to climb down from some of the positions taken by the PTI in the run-up to the elections. His message went directly against the one put out by the party in its ‘first 100 days’ event.

Whatever view one chooses to take, one thing is clear: Mr Umar is doing the right thing. Anxious nerves need soothing, and the voice of someone who is widely tipped to be the next finance minister needs to be heard. The period of the interim government has seen much uncertainty and has had its fair share of silliness that needs to end. His other priority should be to convey apolitical vibes and present himself as aloof from the politics of the transition. Keeping the economy on an even keel should be the PTI’s top priority, as should breathing confidence into investor sentiment. He was right to discuss possible options for stabilising the external sector as well as giving assurances that contracts and deals signed by the previous government would not be tampered with, unless real evidence of corruption surfaced. Having done so, it looks increasingly likely that the new government will begin its term by approaching the IMF, since the other options pointed to by Mr Umar are unlikely to bring in foreign exchange in the quantities required.

In the days to come, he should also elaborate further on the party’s plans for state-owned enterprises as well as the direction of policy reforms. We know that there are plans to move all SOEs into a holding company of some sort, what is being referred to as a ‘sovereign wealth fund’, to insulate them from political interference. But does the party plan large-scale privatisation or layoffs? Will the power-sector companies also move into this holding company? What about administered pricing? Will that be deregulated? How does the party view the sagging fortunes of Pakistan’s exports? Reforming the SOEs is a mammoth job and the party has done well to focus its attention on this problem.  But now, the incoming government has to show that it knows what it is talking about. That begins with realistic appraisals of the problems at hand, as well as serious discussion of the solutions being contemplated by the party leadership. The job of communicating the party’s economic vision has begun; keeping that conversation going should be the next step.

Published in Dawn, August 9th, 2018