EDITORIAL: ADB’s (Asian Development Bank’s) latest report, “Factsheet on Pakistan”, goes to show, all over again, that Pakistan has been unable to overcome internal as well as external “major economic challenges” that continue to restrict growth and weigh on project implementation.
On the one hand, there’s the impact of the devastating floods of last year, the hangover of the pandemic, security issues, structural risks, and also “adverse external shocks”. And on the other hand, there are “uncertainties and institutional factors” like land acquisition procedures, procurement delays and price fluctuations that affect import of necessary raw material.
You could say that some of those issues, like problems stemming from the 2022 floods and the pandemic, could not have been easily foreseen and caused much more fiscal slippage than the government could have calculated – though that, too, is not entirely true – but the same excuse cannot be used for other factors. Institutional lenders like ADB and IMF (International Monetary Fund) have been warning for years, even decades, that layer upon needless layer of bureaucratic red tape causes unnecessary and frustrating delays at different stages in projects, not to mention cost over-runs, yet successive administrations have done nothing concrete about it.
They’ve also been telling Islamabad that fiddling with the rupee’s exchange rate will cause uncertainties that will discourage other countries from trading with us, hurt the country’s export base, and shatter investor confidence in the local market.
Yet, despite the brief period when the previous PTI (Pakistan Tehreek-e-Insaf) government let the central bank go about its business without much influence from the finance ministry, the old, bad habit of artificially propping up the rupee, even when reserves are dangerously low, seems hard to shed.
So we don’t have too many parties, except the people that run this country, to blame for all the price fluctuations that are making imports prohibitively expensive.
There’s also a reason that ADB, just like other lenders, seemingly felt the need to add the same old line about the fate of Pakistan’s economy in this report as well.
“Continued efforts towards fiscal consolidation and policy reforms will be key to improvements in macroeconomic recovery and stability, especially in broadening the tax base and improving the business environment in the country,” it said, even though no previous attempt has succeeded in raising more tax revenue or improving the business environment and the real economy.
Just like the same old advice that “reforms are required to promote high value-added exports, expand social spending, reinforce the energy sector’s financial and technical sustainability and implement structural changes that will strengthen institutions and create jobs” has always fallen on deaf ears.
Just the fact that so far ADB alone has committed 740 public sector loans, grants and technical assistance totalling $39.7 billion to Pakistan, and it’s still waiting for authorities here to get the ball rolling on reforms crucial for many of those projects, tells a lot about our own government’s sense of priorities.
Even now, when ratings agencies are dumping Pakistan and lenders like ADB and IMF are thinking twice before releasing any more money, the political elite can think of nothing better than to go one up against each other in the ongoing zero-sum political battle for all the spoils. And in this fight everything is fair game, even the economy that is barely avoiding default.
The window in which some of the desperately needed reforms could be enacted is fast closing, if it hasn’t already closed, yet it doesn’t seem as if the government is willing to do much except issue the same kind of statements that simply do not inspire any confidence any longer.
Copyright Business Recorder, 2023