EDITORIAL: It would have helped a great deal if Finance Minister Shaukat Tarin had spelled out in a little more detail just what sort of “wholesale planning” the government has done that will boost exports, beef up reserves, and push the economy to above 7 percent annual GDP growth for about two decades. Speaking as chief guest at an event organised to improve investment in Pakistan, Investment, Industrialisation and Exports — Harmonising Efforts for Growth, he treated the audience to the textbook to-do list for a country and economy like ours, then claimed that the government had done exactly that, after 45 years of bad policies by previous administrations, and things were about to go from good to better.
There’s no doubt that the economy did just fine till the 1960s, then the experiment with nationalisation spoiled it, and then the corruption of the decades of democracy and dictatorship alike made things even worse. But repeating the lectures of the past doesn’t shed much light on the future, especially if it’s about “sustainable growth for 20-25 years”. Simply saying, all over again, that the chronically low savings-to-GDP ratio needs to be improved, exports need value-addition, tourism and IT (Information Technology) need more attention, and that industrialisation needs to be consolidated to increase productivity amounts to stating the obvious; which for some reason every finance minister feels obliged to do every now and then.
But the question remains of how what obviously needs to be done is finally going to be done. The only specifics that the finance minister divulged indicated increase in productivity, then exports, revenue and ultimately employment and growth.
The fact, however, is that the country’s biggest export earners are also the biggest rent seekers. For, all these years textiles and the like have remained hooked onto government support and still never incorporated required levels of research-and-development to keep up with a rapidly evolving market and therefore neither diversified nor added much value to the final product. Besides, the IMF (International Monetary Fund) programme ought to keep a lid on any expansionary fiscal ideas for a little while longer.
The world is also changing, and not to our advantage at the moment. Oil ripped past the $100 per barrel mark as Russian forces entered Ukraine, which means higher prices at pumps in Pakistan next fortnight, which in turn means yet another round of cost-push inflation. Other commodities are also rising and a crucial part of our grain supply, which comes out of Ukraine, is also effectively frozen. Therefore, it’s a little odd that at a time when everything warns of more belt-tightening ahead the finance minister is talking about a record stretch of stellar growth just around the corner because of some brilliant policy that he doesn’t care to elaborate upon.
This is not the first time he’s made heroic claims, and he doesn’t have a good record of honouring them. First he rolled out a very expansionary budget and said there would be no mini-budget and definitely no new taxes. That happened. Then he said the government would announce a novel programme to provide some sort of inflation cover to working class families. That didn’t happen. Now we’re supposed to believe he’s come up with some magic formula that will put all the pieces in place, arrange the necessary funding, and deliver stunning results.
The very least that the people and businesses deserve from the government is honesty and transparency. The going is tough enough as it is, and for them to be misled by officials painting a false picture of the economy will create unnecessary problems for all parties, especially the government itself.
Copyright Business Recorder, 2022
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