Building a national consensus on a minimum economic programme spread over a period of 15 years — or the constitutional lifespan of three elected governments — through parliamentary endorsement is generally considered both desirable and doable.
Finance Minister Ishaq Dar recently floated the idea of a ‘charter of economy’ and the need to strike a deal with major political parties to contain the cost of abrupt policy changes to the economy. The Economic Advisory Committee was quick in its support.
Replying to the question of why the subject did not enthuse him five years back when former Finance Minister Shaukat Tareen had initiated it soon after the signing of the 7th NFC Award in 2010, Dar e-mailed the following response:
“It is the most appropriate time in the country’s history to agree on a minimum set of principles and guidelines for economic management that should be above the political divide, and which all parties should adhere to whether in the government or in opposition.
“This will insulate the economic agenda from vicissitudes of political changes and give investors and other economic agents the long-term certainty which is imperative for growth and prosperity.”
Pakistan succeeded in convincing the IMF that the government had made progress in improving the economic management. Inflation is relatively low and the oil price crash has helped.
The situation, however, is far from satisfactory. The twin (fiscal and current account) deficits are rising and hopes of achieving over 5pc GDP growth are waning because of under-performance of the industry and agriculture. The State Bank’s first quarterly report of this fiscal released last month says “the prospects of achieving the FY15 GDP growth target was hindered by a slowdown in LSM and a below-target performance of kharif crops”.
Many experts and businessmen reached for comments broadly supported Dar’s idea. Some expressed reservation over the attitude of the mover, who they found to be a bit arrogant and not easily approachable.
“Who expected the ‘charter of democracy’ to deliver, but it did. If the political class shows maturity and agrees on a minimum economic plan, it would be a service to the people waiting for prosperity to follow the revival of democracy. It would lend some modicum of stability that is necessary for investment and capital formation,” said a former finance minister.
Shaukat Tareen, finance minister under the last PPP government, sees the initiative in conflict with the PML-N’s over-centralised style of governance. “As finance minister, I floated the idea many years back, but it failed to inspire the current ruling party which had occupied the opposition benches at that time. Yes, Pakistan needs a consensus deal on the economy, as stability in the realm of key policies is critical for a business-friendly environment,” he asserted.
He identified tax reforms, hemorrhaging of resources in public sector enterprises, energy policy, governance reforms and unfair distribution of resources by the banking sector as some key areas that are hindering development and where long-term consistency can deliver visible outcomes.
“The finance ministry, which is supposed to be an implementation arm of the government, has been stretched thin. It would be apt if the Planning Commission is allowed space to work on designing policies in consultation with the team of economic advisors and other stakeholders,” he suggested.
Razak Dawood, a successful businessman and former commerce minister, wants the contents of the minimum economic plan to be meaningful. “It would be great if the political parties stop playing politics with the economy and strive to develop a consensus on contentious issues such as privatisation, pricing of services, taxation and subsidies. A generic economic plan will not serve the purpose,” he said over telephone from Lahore.
Salim Reza, a former SBP governor, linked the outcome of the exercise towards the goal of a fair long-term policy framework to the level of public awareness and pressure. “The concept of fairness is critical for a policy to yield results. The government’s resource-mobilisation efforts may not succeed as long as income from all sources is not taxed equitably.”
He considered transparency, free public access to information and clipping of discretionary powers of the executive critical for a workable long-term economic programme.
“It is lame to expect the beneficiaries of the ineffective state to voluntarily turn it around. These elements understand that their good fortunes are not entirely earned but an outcome of the loopholes left to suit their interests,” said a cynic.
“For me, the greater challenge is ignorance, fatalism, apathy, trust deficit and lethargy of the people of the country. Things will improve under public pressure. The civil society is too busy mending for itself to care for society or its direction,” he added.
Dr Hafeez Pasha, who headed the team of economic advisors and served as finance minister, believes that the political environment needs to improve before the collaboration of political parties on the economic front. “The government needs to placate the PTI by addressing its concerns to pave way for a meaningful dialogue on the economy.
“The fact is that all major political parties are converging towards the centre as there is no typical left or right anymore. An exercise in studying the economic content of manifestoes of political parties can be used to develop a national economic programme,” he said.
Saad Amanullah, ex-president of the American Business Council, who champions many social causes and actively supports innovation and entrepreneurship, underscored the involvement of the parliament in the exercise.
“The consensus on a minimum economic programme is important but not sufficient. It will require societal ownership and legal sanction to bring about the targeted outcome,” he said, while advocating the involvement of academia and civil society in the exercise through joint forums in all major towns and cities.
Published in Dawn, Economic & Business, March 2nd , 2015