According to the Pakistan Development Update, a routine exercise undertaken by the World Bank for all member countries, uploaded on 20th May 2017, Pakistan is domestically exposed to natural disasters, terrorism and political events. These three elements continue to plague the economy. Supporters of the Sharif administration maintain that they cannot be held accountable for the sustained negative impact of any of these three factors. However, it is relevant to note that there has been little investment in mitigating the effects of natural disasters due to a fickle monsoon - in some years responsible for massive flooding accounting for many fatalities as well as displacement of large affected populations and in other years for drought that causes loss of life as well as lower farm output that needs to be met through expensive imports. Reservoirs to store water for use during droughts and a canal system capable of diverting water to the sea and/or those areas that require water has yet to be planned leave alone developed. And terrorism which accounts for massive annual injections for military operations - the Zarb-e-Azb and the Raddul Fasaad - have been successful up to a point but sustained attacks from across the border continue. There is also evidence to suggest that not only are terror attacks planned and executed from across the border but also in some parts of Pakistan, including southern Punjab. Granted that the terror attacks have been reduced they have not yet been eliminated.
However, the government's narrative of exposure to political events, at variance with that of the opposition, was not echoed by the World Bank. The government's narrative, enunciated repeatedly by the Prime Minister during his recent jalsas and by his media team reportedly led by his daughter, has been that the opposition is engaged in politically attacking its senior members because they are fearful that if development work proceeds as planned they would be unable to win the 2018 elections. In contrast, the Opposition points to the Panama Papers as proof positive that the Prime Minister and his immediate family engaged in tax evasion and/or avoidance at best and capital flight through hundi/hawala at worst that would account for the multi-million dollar assets held by them abroad today. The World Bank's reference to the Panama Papers enhancing 'political risks' does not dismiss these papers as hogwash, as consistently maintained by PML-N loyalists, and the ongoing inquiry report by the court-appointed Joint Investigation Team no doubt accounts for the 'political risks' to Prime Minister Nawaz Sharif.
The rest of the Update focuses on the flawed economic policies as well as the need to continue reforms that were identified by the International Monetary Fund team under the recently concluded Extended Fund Facility (EFF). These include an overvalued rupee (that erodes Pakistan's export competitiveness), stalled privatisation efforts (that the Ishaq Dar-led Finance Ministry had pledged would be fast tracked as a condition of the EFF), resurgence of the circular energy debt which is attributable to poor governance rather than to theft of electricity (given that Minister for Water and Power loudly proclaimed on the floor of the House that all those who are stealing electricity are being subjected to commensurate hours of load shedding), and below target Federal Board of Revenue performance (though the over-ambitious budgetary targets set by the Finance Minister are domestically held to be responsible).
The Bank also notes that reforms that require collaboration between the federal and provincial governments remain challenging. In this context, it is relevant to note that there are grumblings even in the Finance Ministry Punjab, where PML-N is in power, for the failure of the centre to take provinces on board on tax policies (which account for double taxation on several productive sectors) and disallowing them from investing appropriate amounts on the devolved social sectors by giving the provinces ever higher unsustainable surplus targets with the objective of showing a lower federal deficit. Needless to add, the available forums where federal and provincial conflict maybe resolved are not invoked including the National Finance Commission award.
Growth, the World Bank Update notes, would be 5.2 percent in the current fiscal year, the highest in nine years, and will continue to accelerate in 2018 to 5.5 percent and 5.8 percent in 2019 - growth based almost entirely on the China Pakistan Economic Corridor (CPEC). However, unfortunately, the CPEC is said to have become controversial because of lack of transparency in the selection of the projects, the associated rate of borrowing, and abandonment of the Public Procurement Regulatory Authority rules; coupled with concern within the multilaterals, that the government is providing sovereign guarantees for private-public partnership projects reflected by the hastily drafted technical assistance during the EFF.
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