THE twelfth ‘home-grown’ five-year plan (FY2019-23) will aim at an average 5.8 per cent per annum economic growth, targeting 10 million jobs, says Makhdum Khusro Bakhtiar, the minister for Planning, Development and Reforms.

The plan is being formulated in challenging times. For want of enough forex earnings, the PTI’s coalition government is preoccupied with piling unsustainable external debt and seeking huge foreign investments. Meanwhile shrinking dollar reserves remain insufficient to address rising repatriation of profits and dividends by foreign firms.

In this context, the question arises: will the home-grown model assist in building a self-reliant economy or deepen dependence for innovative ideas, technology, financing and capital that will make sustainable and inclusive economic growth more challenging, if not impossible.

To help boost growth Mr Bakhtiar is also pinning hope on industrial and agricultural development, Chinese support, and incentives provided on investment in the second mini-budget.

Islamabad has urged Beijing to generate some push by bringing its light engineering and manufacturing industry to Pakistan. It is not clear whether these relocated industries will supplement or compete with domestic manufacturers.

There is also an expected $10 billion investment from Saudi Arabia in an oil refinery.

Prime Minister Imran Khan wants planners to adapt poverty reduction strategies from the Chinese and learn about promoting wealth creation from the Malaysian economic model.

More than a decade ago, Malaysia developed a strategy to boost its economy by developing a quality workforce, a competitive domestic economy and transparent markets. Pakistan’s commerce ministry, created some years ago to remove barriers and promote efficient domestic trade, has not preformed to a similar degree.

In Pakistan, while home remittances are being incentivised to build dollar reserves, there is no effort to stop the ongoing brain drain and bring overseas compatriots — a reservoir of expertise and skills — back home for national reconstruction.

Instead Mr Khan tried to persuade the Qatari ruler to accommodate skilled labour returning home from Saudi Arabia during his recent visit to the country.

Innovative thinking for evolving the ‘home-grown’ strategy has yet to surface. It is stated that the plan will aim at economic growth that has a ‘human face’.

In economic literature, economic growth is defined as being an ‘automatic short-term process’ with very limited social reach. As a necessary part of development, economic growth however, does bring a positive change in real output, but only in terms of ‘quantity’, though it provides promising business prospect and builds business confidence.

It is economic development which helps a nation improve its economy, politics and the social well-being of its citizens both in terms of quantity as well as quality.

Somehow the UN Sustainable Development Goals to which Pakistan is committed — and which encompass the concept of economic development — seem to be currently not be on the planners’ radar.

Another goal will be the creation of 10m jobs with an average growth rate of 5.8pc per annum. World Bank research reports suggest a growth rate of 7-8pc over a sustained period of time to tackle growing unemployment but this does not reduce regional income disparity.

During the PML-N’s tenure, growth picked up to a respectable level but unemployment was last reported at 5.9pc (and growing) a couple of years back. Depending on its quality, economic growth may or may not produce enough jobs. And rising joblessness is not the only problem, it is also about improving living standards and quality of life.

The planning minister sees the current consolidation period to be over by the end of the next financial year. Critics disagree

The planning minister sees the current consolidation period to be over by the end of the next financial year. Critics disagree.

Former Federal Finance Secretary Waqar Masood Khan says that the state of the economy is ‘precarious’ owing to ‘unsustainable’ fiscal and current account deficits.

Fitch Solutions notes: “The administration continues to have little appetite for austerity and painful and necessary reforms which would prolong the up cycle… The country is spending beyond its means.”

The International Monetary Fund’s (IMF) Director of Communications Department Gerry Rice informed the media in Islamabad earlier this month that the Fund and Pakistan ‘are continuing discussions for a bailout package’ on Pakistan’s request.

In the past, 5-year plans were superseded by the IMF’s 3-year stability programmes. With the IMF on board, the finance ministry will have more leverage to take the final decision about the size of the development budget.

Economic growth is being curbed by a tight monetary policy when the domestic savings rate is not enough to take care of the required level of investment.

Over the previous four fiscal years private investment fell from 10.4pc of GDP to 9.8pc while public sector investment improved by 0.2pc of GDP. Now public sector development spending is being curtailed while non-development spending, especially on debt repayments and defence, is fast rising.

The evolving international environment is also not conducive for boosting exports. For the year 2019, the IMF forecast is subdued with an economic growth rate of 2.4pc for North Africa, the Middle East and Pakistan region. Economists see a global recession in the making.

In an uncertain business and economic environment, drawing up a realistic long-term plan is a challenging job, made more difficult owing to a lack of national consensus on the way forward.

jawaidbokhari2016@gmail.com

Published in Dawn, The Business and Finance Weekly, January 28th, 2019