FOR most Pakistanis, the prevailing economic conditions have unleashed unprecedented hardship. Steep power tariffs and high fuel costs have made everything expensive. Even the basic necessities are now beyond the reach of the public. Spending consistently more than earning has indebted the country to the core. We have mortgaged the future of even our grandchildren.
The irony is that while the rest of the country is expected to bear the economic crunch, for the top tiers of government, it appears to be business as usual. Foreign trips abroad have been in full force, regardless of the expense involved. Let us bear in mind that foreign policies are made at home, and not through meetings and tours abroad.
It is time our government, an interim one though it is, led the austerity drive from the front, particularly when they expect the rest of the country to bear the economic pressures. We can take a cue from the present chief justice, who has voluntarily given up protocol, privileges and all pomp and show attached to his high office. The administration, too, needs to demonstrate to the people through definitive actions that it stands with them in this time of acute economic emergency.
As a general rule, official tours abroad should be suspended. Online mediums are effective in today’s era, and our ambassadors abroad can represent us. There should be no free electricity for anyone — without exception. No free petrol or designated cars either; only car pools from which vehicles can be requisitioned.
The interim set-up must lead an austerity drive.
All loss-making state-owned enterprises should be closed down or privatised in a manner which is transparent and judicious for existing employees. When East Germany merged with West Germany, a massive programme of privatisation of East German SOEs was undertaken. They chose to sell only those that were functional; rehabilitated some that were not beyond repair and then sold them; and closed down the enterprises which were dysfunctional and could not be set right.
In this time of emergency, we cannot sustain loss-making enterprises, because it is not our own money but borrowed money from which we subsidise their existence. The government’s primary job is to regulate, not build financially unsustainable enterprises. An even better option is exploring public-private partnerships.
The centre as well as the provincial governments cannot create more jobs than they have already done. More jobs can be created only through industrialisation. Our industry is under pressure not only from the high costs of inputs, but also regulatory bodies whose officials hound industrialists, often in search of bribes.
True, industrialists make profits, but they also create jobs, reducing poverty in the process. Barring those who exploit the system to receive subsidies, when an industrialist expands his business, he does so because he has the know-how and capital. He is not exploiting the nation, but generating employment and economic activity. That is the attitude our bureaucracy and regulators need to develop towards our struggling industry. China has developed because they encouraged industrial and technological growth. The US is also boosting its manufacturing efforts. At our end, the long-awaited Special Economic Zones should be constructed as a top priority.
Red tape and corruption are discouraging foreign and even domestic investors from setting up industries in Pakistan. The constitution of the Special Investment Facilitation Council seems to be a step in the right direction. This civil-military initiative seeks to cut red tape and encourage investors to profit from Pakistan’s investment potential in IT, agriculture, energy, and mining.
Circular debt is another big hole in the treasury. The agreements negotiated with the IPPs are clearly loaded against the interests of the people. All agreements must be renegotiated, including the recent ones, invoking force majeure. This economic emergency constitutes more than force majeure; it has the risk of making Pakistan insolvent.
Let us be clear. There will be no easy money coming into our country anymore. Not even in the name of climate justice. We must learn to stand on our own feet. Our leadership needs to have faith in our own experts and our own resources.
We need to do what is most essential: embrace austerity at all layers of the executive, legislature, and judiciary; privatise dysfunctional SOEs transparently; renegotiate terms with all IPPs; and make policies that encourage domestic investors to put their money in industry rather than in real estate. It is always difficult to untie a complex knot. However, if these key areas of bad governance are addressed, much of the rest will fall in place.
The writer is a former foreign secretary and author of Diplomatic Footprints.
Published in Dawn, October 1st, 2023