An economic plan?

August 16, 2019

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THE State Bank governor, Reza Baqir, used the occasion of a flag-hoisting ceremony on Aug 14 to try and breathe a little life into the economy by assuring the country that the direction in which things were moving was the correct one. He acknowledged the difficulties faced by firms and people in the form of rising inflation and unemployment amid a slowing economy, but sought to reassure his audience that the government was working on a ‘plan’ to help the economy turn the corner and return to the path of growth. No indication was given of the time that was required for this, nor was there any hint of what the plan looked like. For the moment, it seems the message is that there is nothing to be done except let the medicine administered by the new economic team take effect.

Missing through all this has been the voice of the adviser to the prime minister on finance. Hafeez Shaikh has now retreated into the background from where he silently calls the shots. As layoffs sweep the country, companies teeter on the edge of bankruptcy and people find their livelihoods squeezed almost to breaking point, the doctor supposedly administering the medicine is barely seen or heard from. There is little doubt that difficult decisions have to be made, and that the pain will continue for a while longer. But Mr Shaikh’s job is also to breathe confidence into the economy during this period of painful adjustment. To not be visible, then, surely amounts to a dereliction of duty.

If what Mr Baqir said about the economic team’s working on a plan to help revive the economy is correct, we should also hear this directly from the finance adviser. Important questions must be answered. Who is putting together this plan? Is it being developed by a small group of people in a closed room somewhere? Is there any stakeholder consultation involved in drawing it up? And more importantly, what will be the pace and direction of economic growth once the time comes to implement this plan? Pakistan’s economy has been through far too many short-lived spurts of growth, followed by catastrophic busts that land the country at the doorstep of the IMF. The government has promised on numerous occasions that the current IMF programme would be Pakistan’s last, so perhaps it would be helpful to know whether the so-called plan that is in the works is part of delivering on this promise. It is important to share the details with the public, and to know from those in charge of the economy where they stand on the promises made by the last finance minister. Adjustment is not the only thing the economy needs. It also needs transparency and visible leadership — both of which are missing at the moment.

Published in Dawn, August 16th, 2019