EDITORIAL: That Pakistan needs a so-called Charter of Economy (CoE) is not a new idea. It was most vociferously floated by Shehbaz Sharif, as opposition leader, when Imran Khan was prime minister, but only to be dismissed.
Now that the economy is in deep crisis, former president Asif Zardari has put it on the table once again. And considering that the former president is much better at moving pieces on the local political chess board than the current prime minister, there is a much better chance of this initiative gaining some sort of momentum this time.
However, the problem will still be getting all parties on board, especially at a time when they are consumed by a zero-sum fight for power.
There’s little to suggest PTI (Pakistan Tehreek-e-Insaf) will change its earlier position of not sitting down with any party that its chairman does not like, given Imran Khan’s continued inflexibility even in the face of rapidly changing political dynamics of the country. Still, Zardari has said, with typical confidence, that he will rally all parties to the cause, so a lot remains to be seen.
The PPP (Pakistan People’s Party) president is right that this charter will have to be agreed for 50 years, learning from the Chinese example of focusing on the long term to lay a solid foundation, since the economy is well past the stage where five or 10-year programmes could have supported it.
Yet the biggest challenge will be protecting it in the immediate term, because even after meeting all strict “upfront conditions” of IMF (International Monetary Fund), the government has been unable to secure the financial lifeline that is desperately needed to avoid sovereign default in the new fiscal year. Zardari will, therefore, have to move with great urgency to get the ball rolling on the CoE if a realistic beginning is to be made.
He talked ambitiously about raising exports and reserves to the level of $200 billion, which needs clarity. Because while it is obviously true that raising reserves to such levels will take care of all our pressing problems, the main issue is toggling the export basket to nudge it in that direction. And that is not going to be possible with the current production model, because even a historic depreciation/devaluation of the rupee has barely pushed export earnings to the upside.
There is a desperate need to add value to exports, which is going to require a complete reset of the production matrix. And that might require more time and money than the country can spare right now.
That will bring the debate right back to political consensus that is necessary for such ambitious plans; more so because the impasse of the last year or so has played a pretty big role in isolating Pakistan from not just foreign investment, but also freezing IMF’s EFF (Extended Fund Facility) and driving away other multi- and bi-lateral donors.
Just the other day the Fund’s focal person for Pakistan went beyond his usual mandate and advised authorities to lower tensions and adhere to the constitution as the political temperature soared and threatened the donor’s lifeline.
No doubt Zardari has his work cut out for him. It helps that there is already broad consensus among most political parties, but the circle won’t be complete till the largest and most popular party is also on board. If the former president’s personal touch can help bridge this particular divide, then there is a good chance of a timely scramble to rescue the economy and set the foundation for long-term stability and growth.
Copyright Business Recorder, 2023
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