Spirit of March

Published March 21, 2022
The writer is a former ambassador to the US, UK & UN.
The writer is a former ambassador to the US, UK & UN.

PAKISTAN will celebrate its national day in an environment of political uncertainty and economic fragility. The March 1940 resolution that laid the foundation for the country was visionary and inspired hope that was eventually realised by the creation of Pakistan as an independent nation. Today, the country is short on optimism about the future while the vision of its founding fathers remains unfulfilled.

Political leaders both in and out of government have yet to take a long view and offer a vision or road map of where they want the country to go. In fact, both civilian and military governments have spent much of the time in crisis management mode, postponing meaningful reform and looking for pain-free, short-term ‘solutions’ rather than taking a longer-term approach and dealing with both the urgent and important. This has left the country’s structural problems — economic, institutional and social — largely unaddressed.

The challenges confronting the country remain daunting. Most are interconnected and have been feeding off and reinforcing each other in an unbroken cycle.

They include the structural crisis of the economy, erosion of the state’s institutional capacity, the education deficit, uncontrolled population growth, environmental degradation and, of course, growing intolerance in society. Security challenges also endure with an unstable Afghanistan on the western frontier and a hostile India on the country’s eastern flank.

Leaders should go beyond cheering tanks and planes to implement our founding fathers’ vision.

Whatever the outcome of the ongoing political battle between the government and opposition, it is whether key domestic problems are seriously tackled that will shape the country’s future. None is more consequential than the economic challenge. The sharp increase in financing gaps in the government’s budget and the country’s trade account as well as rising debt are all a consequence of the country living beyond its means. Inflation has soared, foreign exchange reserves have depleted, pressure mounted on the rupee, and business confidence has eroded. Pakistan urgently needs funds to avert a financial crisis. That’s in the short term and essentially a band-aid response.

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To put the economy on a viable and sustainable footing, steps are needed to deal with the structural sources of chronic budget and balance-of-payments deficits. That requires political consensus on key measures — an economic compact as it were. For this, agreement is necessary among ALL political parties and other stakeholders. What would constitute the fundamental elements of this economic compact? Tax reform should be the top priority to make the system simple and equitable. This should be implemented nationally so that a single tax regime prevails in the country. Serious mobilisation of domestic resources should involve widening the tax base, ensuring compliance, reforming GST and ending exemptions. This, along with reconfiguring budget priorities, imposing spending restraints and cutting subsidies, would constitute the single most important effort to set the economy on a path to sustainability.

Another element in the economic compact should be agreement on a single and liberal business regulatory framework for the country. Consistency is essential to maintain that framework as well as under-implementation projects when governments change. Policy continuity and certainty is the key to building investor confidence. A third area on which agreement is essential is identifying loss-making, bankrupt state-owned enterprises to be privatised. These financially draining SOEs have long been bleeding into budget deficits and adding to the country’s debt — a burden that needs to end once and for all.

There are other core areas that also need to figure in the compact and taken out of partisan politics, such as power sector reform, State Bank’s operational autonomy, market determination of the exchange rate and steps to expand the export base. Again, it will take leadership that thinks long term to forge this compact and determine what reforms can secure consensus. Efforts to achieve such consensus should rest on the acknowledgement that unless the economy is fixed, all else is in vain.

The same argument holds for the education challenge and the need for a long view. Quaid-i-Azam Mohammad Ali Jinnah once said, “Education is a matter of life and death for our country.” Yet his advice was never followed. Pakistan still has the world’s second-highest number of out-of-school children — 22 million. The country has always underspent on education. Yet no single issue is certain to transform the country’s destiny than investment in education. This is the key to economic progress and global competitiveness and to countering extremism and promoting a more tolerant society. Although education is a provincial subject, the federal government should take the lead to forge agreement on prioritising education reform and encouraging the provinces to allocate more funds aimed at enhancing both the coverage and quality of education. Education for all should be seen as a strategic imperative, not just a desirable social goal.

Another compelling area for policy action that rarely figures in official priorities or political debate is the country’s rising population, still the fastest growing in South Asia (other than Afghanistan). This has far-reaching economic and social consequences and security implications, especially as there is an absence of planning for the growing number of people. Unless population management steps are nationally implemented, a demographic disaster looms if educational opportunities and jobs do not keep pace with the unbridled growth in numbers.

Read more: Population and security

Institutional reform too is an imperative on which the country’s political leadership needs to take a long view. It is widely agreed that the state’s institutional capacity has weakened over time. Unless the instruments of governance are made fit for purpose to meet the requirements of modern governance and improve service delivery, the most well-conceived government policy cannot be effectively implemented. This requires comprehensive reform, not just piecemeal tinkering. There are plenty of good recommendations in reports by successive official commissions to draw on. The key elements of reform are in any case well known.

This is not an exhaustive list of issues that need to be addressed, but they are the most consequential and merit the attention of political leaders if they are to shape a hopeful future for the country. The spirit of March 1940 ought to go beyond cheering tanks and planes to inspire an effort to reimagine Pakistan according to the vision of our founding fathers.

The writer is a former ambassador to the US, UK & UN.

Published in Dawn, March 21st, 2022

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