Attracting the much-needed local and foreign investments, accelerating the privatization process, generating more employments and alleviating poverty are some of the big challenges the Jamali government is faced with to turn the economy around.
The government officials and the independent economists and experts believe that although there were visible improvements in the fiscal and current account deficits, revenue, export, remittance and machinery import, there were also the signs of failure to attract local and foreign investment by the Musharraf government. Simultaneously, the claim to collect $3 billion from the state sector privatization, especially the government corporations such as Wapda and the KESC turned out a mere slogan.
The finance ministry officials admit a number of challenges lying ahead which need to be tackled effectively and conscientiously by the Jamali government. The PM’s Adviser on Finance Shaukat Aziz has also assured of putting in extra efforts to ensure continuity in reforms.
As far as the indigenous and foreign investment is concerned, only tall claims made to remove the irritants and improve the law and order situation. Consistency in government policies is also being stressed, if otherwise, for the benefit of the investor. The fears of terrorism, no doubt had marred the investment climate in the country during the last three years.
The initial hounding by the National Accountability Bureau (NAB) against the bank-defaulters extensively contributed in draining the investors out of the country, and also refrained them from making new investments. Without investments the overall GDP growth cannot be increased. Now, Jamali and his team are being proposed to improve their government’s credibility by luring back the investors. Due to the presence of better fiscal and non-fiscal opportunities in other regional countries, the investment climate over there has seen a lot of improvement during the last couple of years. Why investors are shying away from Pakistan is a question, the higher authorities need to address.
Similarly, no real privatization could take place during the last three years due to unfavourable local and international environment. The Privatization Commission too, failed to dispose of most state entities due to one reason or the other, few claiming of a non-transparent process, keeping in mind of the PTCL, the OGDC and the PSO — which enjoy good reputation — could have been disinvested.
In regard to employment generation and poverty alleviation a widespread perception prevails that the fiscal space created during the last three years could not be used for development purposes. This was 1.5 per cent of the GDP, but the development expenditure was 3.3 per cent in 2002-03 which was the same in 2001-02. The government continues to say that Rs161 billion would be spent on the development during the current financial year. But, then the question arises how it could be possible when not much funds had been spent during the first six months of this fiscal.
As per official figures, the government had created about 2.5 million new jobs in the last three months, although there is no gauge to substantiate these claims. The government too, has conceded its failure in doing more in this respect. In the current situation poverty alleviation is being hotly debated both by the government and the donor agencies. The adviser on finance does not mince words to acknowledge of overnight poverty alleviation but stresses of sustained efforts for achieving the desired results. Donors are now asking the government to match development funds and direct the provinces to seriously address the issue by substantially allocating the amount. The failure of the Social Action Programme (SAP) has forced donors to seek assurance from the government for a more transparent process, failing which no fresh assistance could be offered.
There had always been differences between the government and the opposition about the development strategy. It is often seen that if a government decides on something, the opposition is sure to undo it predecessor’s achievements, if at all it comes into the power. Therefore, it is being gravely felt that there should be some agreement between the government and the opposition on certain development issues, so as to honour various commitments made with the donor agencies and other foreign companies and contractors.
Presently, the World Bank officials are finalizing their new development strategy about Pakistan and are in the process of meeting the cross section of people. They want to meet the government and the opposition politicians, along with establishing contact with the independent economists, the experts and the financial journalists with a view to having their input in finalizing the Bank’s new development strategy.
“We are ready to deal with the new political government and our agenda is to help Pakistan specially in poverty alleviation and promote overall growth,” said an official of the bank last week. However, he said, the Bank would certainly make sure that the funds were judiciously spent and the past experience of the SAP was fully kept in mind.