It does not need a national economic council of defunct economists to tell the coalition government what went wrong in four years or so. Time is not on its side anyway. But a strategic focus and Shehbaz speed can reverse diminishing returns. The start is good. The rich have spoken through the stock exchange and the foreign exchange market. The poor and the low income earners have been placated with a little more in the pockets. That, sadly, is all that can be there in the nature of relief. More and sustained improvement in the human condition has to wait until the change in structure.
The government is committed to elections and accountability reform. Simultaneously, the government has to move speedily in key areas of education, energy and economy. In education, an important step has already been taken by linking BISP support to schooling. The good experience of Punjab Education Foundation should be replicated across the country. Next should be to restore order in the Higher Education Commission. Thoughtless ordinances in rapid succession just to satisfy egos have played havoc with the higher education. All illegal actions including the amendments in the HEC Ordinance, reduction of Chairman’s term and appointment of tainted people to the Commission without due process have to be reversed. Despite restoration by the Islamabad High Court, a reformist Chairman has been made nonfunctional through the backdoor. His term should be extended by at least two years to complete the disrupted reform process. Ad hoc bodies such as the taskforces on knowledge economy and science and technology, besides the university in the PM House, diverted HEC funding to wasteful projects. These must be wound up and those identified by the court should be called to account.
Energy is an area where production, distribution and pricing have all reached the limits of our capacity to reform. The would-be custodian of finance had nothing much to say on the subject, except that the previous government had added to the already high fiscal deficit by reducing the prices of petrol and electricity in violation of the agreement with the IMF. There are reports of heavy electricity load-shedding, although the summer has not fully set in. Come winter, the gas load-shedding will be staring in the face. Rising world prices are beyond our control, but signing sensible and timely agreements is not. Nor is the efficient management of supply, transmission and distribution. Demand management is the worst of all. Energy consumed to produce a dollar of GDP is among the highest in the world. Alternative and renewable energy continues to be low on priority. Solar equipment has actually been heavily taxed.
Poor education and costly energy weaken the structure of the economy. Persistently rising fiscal and current account deficits are symptoms of a deep-going malaise. Governments have mostly been engaged in firefighting by arranging financial succour from friendly countries, the IMF and other donors that predictably led to the classic debt trap – borrowing to service previous debt. This government does not have the time to tread any different path. Still it can try to devote the better part of whatever fiscal space it creates to education and energy. Inflation, a boon for those who can raise their price and a bane for those who cannot, is supply-driven, essentially, federally administered prices and provincially misgoverned supply chains of foodstuffs. Prime Minister’s direct experience of the latter may be useful in dealing effectively with the former. Whether this will fulfil preconditions to sustainable development depends on clarity about the life of the coalition government.
Published in The Express Tribune, April 15th, 2022.