THE impulse for policy prescriptions that will quickly ‘fix’ the rotten economy, create tens of hundreds of jobs and attract billions of dollars in investment is quite strong among our ruling classes as they desperately look for instant results to take credit for economic success. These shortcuts may produce immediate results, but are not the kind of solutions likely to lead to long-term economic stability and prosperity. That is the message a senior World Bank bureaucrat sought to convey the other day when he cautioned our politicians, business elites and other powerful stakeholders against relying on short-term measures such as domestic debt restructuring and attracting one-time investment without addressing the ‘big picture issues’ through reforms aimed at improving the business climate, tax system, market conditions, public entities and human capital. “Pakistan’s economy is stuck in a low-growth trap, with poor human development outcomes and increasing poverty. Economic conditions leave Pakistan highly vulnerable to climate shocks, with insufficient resources to finance development and climate adaptation,” the World Bank’s regional vice president for South Asia Martin Raiser told the media. “It is now time for Pakistan to decide whether to maintain the patterns of the past or take difficult but crucial steps towards a brighter future.”
The ‘advice’ comes at a time when revised national accounts show that our GDP actually contracted by 0.17pc during FY23 against the original estimate of 0.29pc growth. Though the economy had posted a ‘high’ growth rate of 6.17pc the year before, it was the result of quick-fix policy prescriptions — a cornerstone of past economic strategies — rather than economic restructuring. Pakistan’s present crisis is not unique. Several other countries have experienced similar episodes. Nor is it the first crisis of its kind to hit us, even if it is much deeper and has lingered longer. While most nations, such as Pakistan, went for quick results to pull off temporary stabilisation, a few like India and several Southeast Asian economies turned their crises into opportunities by implementing tough reforms for a durable turnaround. The reform programmes must be extensive, and long-term plans should be aimed at restructuring policy frameworks and other deep-seated economic issues and vulnerabilities underlined by Mr Raiser. Such plans always look much beyond immediate gains. The question is: do our rulers have the courage and patience to make and implement them?
Published in Dawn, November 30th, 2023