[Economics] Pakistan’s piecemeal economic management

[-_-Moltres-_-]

 

Amid some uncertainty about a bailout from the International Monetary Fund (IMF), the government hopes the Fund’s executive board will meet in September to approve a $7 billion loan package for Pakistan. Finance Minister Mohammed Aurangzeb had earlier expected this to take place in August. The delay is attributable to the need for the government to first secure around $2 billion in additional financing and confirm $12 billion of debt rollovers from China, Saudi Arabia and UAE. The government is confident that the larger, longer duration Fund program will be approved as all other conditions have been met. Once this happens it will of course help to stabilize the economy, that has been in the critical ward, and restore some confidence. But while the bailout is necessary to meet the country’s immediate financing requirements, it is not sufficient to drive a sustained economic recovery. External support is a fire fighting response that cannot fix the economy’s structural weaknesses. IMF programs help to create the conditions for economic recovery. But policies to grow the economy, promote investment and build business confidence are for the country to evolve, own and implement through structural reforms. This requires an economic vision and a comprehensive plan. So far, a visionless government’s economic strategy has involved little more than meeting IMF conditionalities, trying to secure debt rescheduling from bilateral donors and seeking high-cost commercial loans from Middle Eastern banks. The government has now also approached Saudi Arabia for an additional loan. Prime Minister Shahbaz Sharif keeps talking about rolling out an economic plan but five months into his government none has emerged. He has appointed a plethora of committees and task forces on a range of economic and trade issues as if economic management can be done by committee. This, when the solutions are already out there, long known, never implemented. One such committee was tasked by Mr.Sharif with evolving a home-grown economic plan, ironically under the stewardship of a foreign consultant. But when the plan it produced left the prime minister unimpressed the task of reviewing it was handed over to yet another committee headed by Deputy Prime Minister and foreign minister Ishaq Dar, whose handling of the economy in previous PML-N tenures proved ineffective and controversial.

https://www.arabnews.pk/node/2568743