‘INCREMENTAL’ budgeting is generally practised by the government of Pakistan. That means that the Ministry of Finance’s recurrent budgets are not based on costing the latest development plans but, in effect, previous budgets are slightly raised or decreased, depending upon the available funds, with exceptions such as a new government’s few pet initiatives.
Ideally, plans should drive budgeting —the budget ought essentially to be derived from the cost of the plans. But the latest plans may not be harmonised with incremental budgets. And since the finance ministry is the IMF’s counterpart, this is cited as another reason for its pivotal role. The result is that the finance ministry largely determines national development policy.
In the last few decades, the ministry has often been led by persons with a background in banking or accounting or economics — usually with strong IMF/World Bank links. Some of our key socioeconomic areas such as child malnutrition now fall in the range for least developed countries. Stunting in children under five years is 36.7 per cent in Pakistan, 35.1pc in Afghanistan, 29.6pc in Syria and 6.3pc in Iran. What can be a source of greater shame for the rich than the fact that one-third of their country’s under-five population is now classified as stunted due to long periods of insufficient nutrient intake and frequent infections?
Unicef reports that, in Pakistan, 22 million children (five to 16 years) are out of school. It is time to reassess who ought to make national development policy.
A look at the kind of issues that need to be considered in national development policy can indicate the qualities policymakers ought to have to address them.
For example: should healthcare include free school meals for those who qualify? Should there be an emphasis on preventive or on curative healthcare? What percentage should be spent on clean drinking water and mosquito control? Should there be a few hi-tech facilities in big cities, or less sophisticated but more numerous and widely dispersed facilities? Should medical education be subsidised, knowing that many applicants aim to emigrate? Should regulations and subsidies favour big business, hoping for trickle-down — or should there be a level playing field for all? Should there be indirect taxation (putting the burden on the poor) or direct taxation (that leads to facing the wrath of the powerful)? Price controls for all essential food items or direct subsidy for the deserving?
Economists should be instrumental, with their insights being key inputs in public policy decision-making.
When state subsidy to businesses is deemed justified, for instance, to promote exports, should the state/citizens also get a share of the resulting profits? Is social protection for the poor, the unemployed, the old, etc, an extravagance that a poor country can’t afford, or is nurturing citizens a necessary investment? Should agricultural water distribution be through the customary method, with 50pc utilisation or via efficient design by technical experts though that will likely antagonise influential landowners? What about a well-rounded education (literature, poetry)? Or should the focus be on science and vocational skills?
While immensely valuable in their field, bankers or accountants have little relevance to policy issues in the areas listed. Further, with a few worthy exceptions who have a much broader perspective and vast experience, the former staffers of multilaterals are oriented to follow their given institutional policies and procedures (for example, recovery of loans disbursed).
So, what qualities are required in policymakers to address issues such as those mentioned?
They include: being truly aware of the people’s living conditions and their needs; understanding society’s core values and priorities; empathising with the people; loyalty only to this country; deep knowledge and experience in one or more sectors, or in administration; being chosen by the people as their representative; not having any conflict of interest in terms of (a) one’s enterprise; (b) association with a foreign institution; (c) or expectation of future benefits from a business, multilateral agency or foreign institution, as a result of policy work for the government.
“Economists have no special competence in determining what the objectives should be, but they can help in translating the objectives into a more operational form,” said M.S. Ahluwalia (United Nations University). In general, the work of economists can involve analyses of public policy proposals and evaluating them for impact, such as research and economic analyses of issues; organising surveys and collecting data; analysing data using statistical methods; interpreting and forecasting trends; making recommendations for designing policy or for dealing with economic challenges. It can also involve questions such as, ‘what could be the impact on the labour market of an increase in the minimum wage or the cost to the economy of regulations and subsidies favouring big business?’
Economists should be instrumental, with their economic research and insights being key inputs in public policy decision-making.
Nevertheless, it is crucial to understand that economic analysis is only one input in the overall deliberations. The economic analyst must not be confused with the policymaker or decision-maker who should have a much broader view and vision.
Policymakers must use the broadest perspective (including considerations such as citizens’ needs and expectations, fairness, and equality, an analysis of interest groups and an understanding of the influence of sociopolitical institutions, national development strategy, long-term national goals and economic implications) and then develop priorities based on all the varied considerations and make informed policy decisions.
The excessive policy determining authority acquired by the finance ministry needs to be curtailed. Planning and sectoral ministries ought to get their due say in assigning policy priorities and subsequent budget allocations.
Political parties need to be ready with policies, plans and personnel before they come into government, otherwise the bureaucracy may understandably continue with business as usual. National development policymaking ought to be entrusted to people with the requisite background and qualities.
The writer is the author of Pakistan: Principles of Public Policy Redefined — How to fast track progress and win over citizens.
Published in Dawn, September 22nd, 2022