Pakistan ranks even lower

The World Bank has further downgraded Pakistan's ranking in doing business index to 138 out of 189 countries indicating serious lacunae in the system that not only remain unaddressed by the Sharif administration but, given a significant decline in our rating during the past two and a half years, indicate flawed policies that are actually contributing to the decline.
The erstwhile perception that the PML-N is more business-friendly compared to the Pakistan People's Party is belied by the data. In 2007, Pakistan ranked at 69th place, in 2010 at 89th place, in 2001-12 at 105th place while in the first year of the incumbent government our ranking declined to a 107 followed by a decline to 110th place in 2014, 136 in 2015 and 138 in 2016.
The PML-N senior party members, who hold cabinet positions in not only the centre but also in the Punjab province, have blamed their predecessors for all that ails the country's economy and insist that after the party assumed the reins of government in June 2013, the economic downturn was reversed. This is precisely the view that was expressed by Prime Minister Nawaz Sharif during his three-day visit to Sri Lanka projecting a Gross Domestic Product growth rate of 5 percent due to what he averred were 'bold economic reforms'.
The index is based on the following factors: ease of getting construction permits, availability of electricity, registering property, access to credit, minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. Contract enforcement remains a major issue in this country and legislation remains not only weak but what is there is not implemented. The Reko Diq and its fallout on prospective foreign investors engagement in the proposed privatisation is evident accounting for the decline in foreign direct investment. Electricity shortfall continues and this in spite of claims by cabinet members to the contrary. The recent admission by the Minister for Water and Power that in 2018 the shortfall would be above 7,000MW must surely have contributed to making existing as well as prospective investors very frightened. The heavy reliance of the government on borrowing from the commercial banking sector, given that it committed to the International Monetary Fund not to borrow from the State Bank of Pakistan, accounts for crowding out of private sector credit. The government's stated focus is on broadening the tax base whereas in fact it more interested in maximising the amount of tax collected rather than maximising the number of tax filers. And last, but not least, independent economists have been persistently challenging the credibility of government-released data - a challenge largely premised on lack of data rationalization. Thus the 5 percent growth claimed by the Prime Minister for the current year is unlikely with best estimates placing the rate at 4.2 percent.
What is further inhibiting the productive sector are delays in payment of refunds that is further creating a liquidity crisis. Furthermore, the policy of the Dar-led Finance Ministry to keep the rupee overvalued in an attempt to reduce the external debt servicing component of the budget has had a major negative impact on our exports that have declined in recent months. This slide is despite of the edge that our exports enjoy due to the grant of the GSP Plus status by the European Union.
It is unfortunate that the current economic team has been highly resistant to corrective proposals by independent economists so far, including the suggestion to fuel growth and to desist from an inordinate focus on reducing the budget deficit and has instead dismissed criticism as unfounded. One would hope that the government revisits its policies given the decline in exports, decline in foreign direct investment and decline in rating in index of doing business.