Watch the economy
Steady as she goes?
There’s never really a time when a World Bank or IMF pat on the back is a bad thing. Yet reading too much into donors’ sense of satisfaction – especially when reserves and deficits they speak of have improved on exogenous factors – sometimes risks ignoring vulnerabilities in the economy. Granted, growth is about as much as could be expected given our many revenue constraints. But deficit, inflation, etc, owe primarily to factors way beyond the finance ministry’s control. And if hadn’t been for the IMF program – in which we missed benchmarks for practically all important indicators at all important meetings – consolidating this welcome relief would itself have been difficult.
Yet it’s still not as simple as the Fund and World Bank have recently implied. Revenue and deficit are precarious not just because they remain hostage to outside factors. There’s also the question of Pakistan’s internal politics. The general election is not very far. And the present political climate has forced the ruling party into an early campaigning of sorts. That, as a rule, means additional pressure on numbers just like revenue and deficit. And since Prime Minister Nawaz Sharif has been recently stunned by the Panama affair, he’s likely to resort to a more visible sort of expansionary fiscal policy than would otherwise be the case. In the end that means more pressure on growth, earnings and, of course, eventually the deficit.
Our lenders of last resort should rather caution the government at this precarious time. Even if it is maintaining a decent growth trajectory, it is still not moving on enhancing export earnings or tax revenue. That means that basic revenue generation remains compromised and the economy is stuck in a region well below par. Such situation is closer to stagnancy than vibrancy. Even if the economy is steady, the course ahead should seek to diversify and expand as opposed to stay as it is.
Pacifying the religious right
While attempts to bring the existing seminaries under government supervision have yet to produce results, new seminaries continue to come into existence. According to one of the seminary boards there has been an increase of 10 percent in the number of seminaries and students as compared to the previous year. How many of the new seminaries are foreign funded or impart extremist views or are actually involved in turning out terrorists is yet to be known. Whatever the reasons behind the proliferation, there is a lot for the state to worry about as it has yet to set up a satisfactory oversight mechanism over the existing madrassas
Attempts to establish government oversight has met with strong opposition from religious parties which have branded the efforts as intentions to undermine the religion. The seminary funds are utilised by the religious parties to expand their activities while the student community provides them a captured constituency. The PML-N government has been at pains to pacify the religious right.
The attitude has hampered evolving a comprehensive policy of seminary reforms. Off and on under pressure to enforce the NAP, the government has issued figures about what was being done. But there has been no complementary commitment about expansion of the educational facilities in mainstream education sector or improvement of the state run schools and colleges.
Pakistan has a large reserve of unemployed youth which if provided training in skills needed by the market can turn the country around. Failure to do so creates millions of unemployed and disoriented men and women amenable to the propaganda of the terrorist networks. The seminaries provide free education and a career as clergy for the ordinary student and for the more talented individuals a future as well-to-do leaders of religious parties. The policy of looking the other way as gulf charities with dubious agenda set up hundreds of mosques and seminaries has helped in the spread of extremism and terrorism. Pakistan’s insufficient expenditure on education which is the lowest in South Asia has helped in the spread of seminaries.
Nawaz in a tight spot
Internal and external factors
The timing of the Panama Leaks has been particularly brutal for Nawaz Sharif. At home he’d weathered the dharnas and steered the party well through the by-elections and LG polls. But with the operation creeping into Punjab tension was once again mounting with the brass. PML-N in Punjab did not do too well on that front. It had just made the boast about its police force being up to the task; and an unprecedented humiliation lay just around the corner. Then came this bolt from the blue. The opposition naturally went for the jugular. Since then Nawaz has always reacted, never acted.
The outside situation has not helped. Kabul has just cut off Pakistan from the peace talks, throwing the entire QCG (Quadrilateral Coordination Group) thing into a tailspin. And just as quickly Washington has gone back to the ‘do more’ demand. The Haqqnis are back in the news, and Pakistan’s ‘sanctuary’ for the Afghan Taliban is, again, unnerving everybody from Ghani in Kabul to Congress in Capitol Hill. And the less said about the latest pendulum-swing in relations with India the better. Clearly meaningful, result-oriented talks are not on the horizon. Nawaz must find this bit particularly difficult right now since he chose to play foreign minister himself since the beginning of the term.
Unfortunately, Nawaz does not seem to have adequate answers to any of his pressing problems. There’s no telling where the Panama probe might go; especially since any real investigation will require a forensic audit. And money trail are surprisingly easy to uncover in this day and age. Also, it’s difficult to see where the Afghan confrontation will lead. If there’s no cooperation on the talks, there’s little quantifiable common ground. And since the process is so intricately linked to goodwill in the White House, there’s a lot of important funding that might suddenly be in jeopardy. With options running out at home and abroad, this must not be a particularly enviable time to be the prime minister of Pakistan.