FISCAL and foreign currency account deficits were destabilising the macroeconomic situation. The government, in a bid to acquire macroeconomic stability, has been trying to reduce both deficits. Devaluation and import duty changes are the main tools on the currency side. Additional taxation measures have been taken to raise revenues and an austerity drive has been initiated to reduce expenditures. The economy has responded to the changes to an extent, and trade and fiscal deficit have narrowed a bit or won’t be as large as they would have been had these measures not been taken.
Import and expenditure curbs will slow down the growth rate. This means lower employment generation and lower income increases for all. Expenditure cuts have mainly hit development expenditures. Development expenditure is where the government has the most discretion, so most cuts inevitably hit development the most. But development expenditures impact growth directly.
Development has been cut at both federal and provincial levels. The federation asked provinces to run surpluses in their budgets. Some complied. Those that did have had to slash their development spending deeply. In some cases, the provinces do not even have the money to run existing programmes. For example, Punjab has halted the expansion of private-public partnerships in education, and is even having trouble coughing up money for programmes that were already under way.
The austerity imperative is not just going to go away in a year or two. For Pakistan to be able to increase expenditures and open up imports, we need structural changes in the economy. Stabilisation does not guarantee structural change. If exports and tax collections do not start increasing, the government will not have the fiscal space to increase expenditures. And exports and tax collections are not going to go up in a year or two. The need for austerity, though it may be not as severe as it was this year, will remain with us for some time.
Our education sector needs significant improvement. How is this possible without more money?
The provinces are going to feel the pinch even more. The federal government is looking to reduce the share of the provinces in the next National Finance Commission award. There is going to be some provision, out of provincial shares, for former Fata as well. There might be a cut for Punjab if the weight of population is reduced in the NFC formula. No province has a local tax base and they all depend on federal transfers for resources.
We have 20-odd million children out of schools. The quality of education in most of our schools, private and public, needs significant improvement. How is this possible without more money?
This government has promised equality of opportunity to all — and education is a big part of this. The government, through numerous statements, has said they want ‘uniform’ education for all. How is this going to happen under austerity?
I want to debunk a really misleading argument that has been doing the rounds in Pakistan courtesy of some education experts. They argue that we do not need to spend more money on education but to spend more efficiently, and that will give us the necessary gains. There is no doubt that expenditure efficiency, whatever the field, is low in Pakistan and could be improved, but if a nation only spends 2 per cent to 2.5pc of GDP on education, there is no way, whichever way it stretches this money, that it is going to be able to provide education for a population of 207m with a large proportion of young people.
If 20m children are not going to school, clearly, they are mostly those whose parents cannot afford to send them to private, fee-based schools. How are these children going to be educated without more schools? How many can you fit in existing schools and classes when a lot of your existing primary schools only have two to four classrooms?
Rahim Yar Khan has 2,200-odd government primary schools and only 222 high schools, Rajanpur has 989 primary schools and only 69 high schools, for Bhakkar the numbers are 1,027 and 114, and for Rawalpindi 1,198 and 388. When the objective of the government is to have every child finish high school, how do we cater for all children who join primary school if we do not set up more high schools? Can children from 2,200 primary schools fit into 222 high schools? And we do not even provide transport to children.
Dataset after dataset is showing the poor quality of learning in our schools. It might be improving a little, but the level is still very low compared to where children should be at their age and compared to where their peers from other countries are. How does one improve the quality of learning without more resources? We have already gotten gains in learning through introducing monitoring systems across the education system. Teacher attendance is also up. Now learning gains probably need to come by improving teacher motivation as well as their pedagogic and subject skills, and by creating communities of learning around our schools. How do we do all this without more funds? It is hard to see how large-scale interventions (there are 100,000-plus government-run schools across Pakistan) can be made without more resources.
Unless more resources are available, it is hard to see how the government will be able to achieve any of its education promises. And resources are definitely not going to be available for the next couple of years. It might even be longer if our exports do not respond and if the provinces and federation do not find new ways of taxing and of extending the tax net. It seems ‘education for all’ and national and international commitments will remain unrealised promises for quite some time to come.
The writer is a senior research fellow at the Institute of Development and Economic Alternatives, and an associate professor of economics at Lums, Lahore.
Published in Dawn, March 22nd, 2019