As the new provincial governments are finding their feet in a rather very difficult economic environment, it is important to fix the problems at the root. This means setting aside the temptation to randomly pick up issues and their solutions in a narrow and rather spur-of-the-moment way, and approach them through formulating a significantly broad-based and deep economic policy.

This is necessary not only for the province, but also for assisting economic policy formulation at the federal level, and meeting the overall economic goals at the national level. While this is true generally, provincial responsibility is all the more important in an era of polycrisis – economic, environment, and epidemiology related – and when the country is suffering from narrow fiscal space, huge debt distress, and very difficult climate change related issues.

The country is in the grip of acute stagflation – high inflation, and rather a stagnant, low economic growth – and it is important that, in addition to policy at the federal level, by both the federal government and State Bank of Pakistan (SBP), provinces should take policy steps to reduce the cost of living, and doing business by formulating a ‘price commission’ which should take steps to improve reaching better price discovery by improving the governance structures in markets, and in checking against over-profiteering.

Moreover, given inflation, especially food inflation has a lot of say from aggregate supply side, it is important to check against hoarding practices, whereby, among other steps, it would make sense to create a wide network of warehouses by the government to bring efficiency in supply.

An important step to have better prices for instance for farmers, and also for better rationalizing prices at the retail side, it is important to introduce governance, and incentive structures – especially providing transportation services – so that the otherwise overall exploitative role of ‘middle-man’ is taken out of the supply chain system.

While prices are better rationalized through economic policy formulation on the lines indicated above – including engaging technical expertise from China to adopt ‘dual-track’ pricing mechanism to provide more stable and supportive prices for important sectors for consumers, domestic producers, and exporters – it is important to also formulate a labour policy that appropriately rationalized real wages, especially given since the pandemic incomes have not anywhere increased at the pace to match rise in prices, of both goods, and services like health, education, and transportation.

An important policy formulation is to enhance fiscal space not only for meeting provincial needs, but also for producing fiscal surplus for the federal-level finances since the primary surplus conditionalities to prevail in an IMF programme in which the country will most likely continue to be in during the medium-term. This would require that provinces not only bring greater allocative and productive expenditure efficiency, but also take steps to enhance tax base.

Here, it is hoped that the otherwise quite obvious misgivings of over-board monetary, and fiscal austerity policies will be meaningfully internalized by economic policy at the federal level, and therefore, reversed for reducing both cost-push and imported inflationary channels, and also reducing debt distress; in turn, creating greater fiscal space for much-needed greater development, stimulus, and resilience spending needs at both the federal and provincial levels.

It would make sense that provincial governments should form an ‘economy war cabinet’ in view of the enormity of economic, environment, and epidemiology challenges, for coming up with more focussed economic institutional, organizational, and market reform strategy.

Out of the box thinking is required to tackle the enormity of economic and environmental challenges on one hand, and the precarious, inequality, and poverty situation, on the other. For one, physical economic architecture needs to be approached with much-improved performance and expenditure rationalization. Hence, it would make sense, for instance, to produce ‘model’ basic health units, government hospitals, schools, and colleges.

Here, a best possible model is reached at that is optimal both in terms of cost-effectiveness, and service provision. This design is then categorized into small, medium, and large pre-determined sizes, given the particular population needs of a specific district/sub-district unit.

Such designs are then replicated across the province for reaching more predictable and quite uniform spending, and completion timeliness. This would also bring efficiency and transparency gains for the purpose of monitoring and evaluation purposes.

Since public service is the ‘players of the game’ among overall economic agents in private sector, and in market interactions, while economic institutions – ministries at the federal level, and in the case of provinces with provincial reach, and departments at the provincial levels – formulating the ‘rules of the game’, it would make sense to create technical cadres in the provincial management services.

Hence, in addition to the currently mostly administrative nature of employment here, technical fields like economist, educationists, doctors, climate change and overall environment specialists, and areas which are important for foreign/domestic investment – for instance, as under the focus of Special Investment Facilitation Council (SIFC) – climate change, and ‘Pandemicene’ phenomenon related, should be created.

Last but not the least, the provincial bureau of statistics should be made independent of any department for bringing greater objectivity and transparency and vastly improved in terms of capacity. This is immensely important, given the highly sub-optimal performance of these bureaus over the years, which should not be the case in view of the fact that better quality data is essential for improved policy formulation.

Copyright Business Recorder, 2024