Post 2007 period for Pakistan’s economy has been quite tough. Until 2011, the cost of the War on Terror on our indigenous economy has been a whopping $67 billion. As a consequence, Pakistan’s investment to GDP ratio has declined from 22.5 per cent in 2006/07 to 13.4 per cent in 2010/11. Hence the pool of unemployed workforce has grown exponentially and poverty levels have deteriorated. The middle class has shrunk phenomenally and has been struggling to make ends meet. Socio-economic disparities are on the rise and this is further amplifying the growing divide between the rich and the poor.
Increasing incidents of suicide bombings, worsening of power crisis, poor economic governance, continuing unrest in Karachi and other parts of the country, flight of capital and increasing inflation have caught the economy in a severe low-growth rut. However, all these problems have taken root due to our own follies, and cannot be attributed to anyone else. We are indeed the authors of our misfortunes.
What should be fixed first then? Well among other indicators, economic governance perhaps is one of the most significant indicators that we should scrutinise first. It reflects how economic decisions are made. Good and timely decisions can turn the economy around. On the other hand, bad decisions with narrow political considerations and short term political gains can push the economy off the cliff and produce deep cracks which later become hard to repair.
Given the government performance in the last many years, the economy has plunged into the depths of oblivion. However, it can recover as long as the government has a will to make tough decisions.
Ironically, many incompetent people are peddling the wheels of the economy that too in the wrong direction. The heads of key public institutions, I guess, are topping the list of our misfortunes. It is hard to disagree with the claim that many such public institutions are facing the rot, due to mismanagement, corruption, incompetence and nepotism.
Pakistan Steel Mills, PSO, SNGC, SSGC, PASSCO, TCP, PIA, WAPDA, Railways, PEPCO, Port Qasim, USC, etc., are no doubt rotten-eggs riddled with corruption and victims of blatant neglect on the part of policy makers. Politically backed strong union-mafia seems to be in total control of PSEs and have proven over time to be the major hurdle in the performance of such State owned entities. Overstaffing and political appointees in the PSEs are causing serious damages to the productivity of these organisations and are the main source of increasing losses.
The Railways, PIA and Pakistan Steel Mills are classic case studies in this regard where incompetent captains have sunk the ship. Unfortunately no one seems to accept the blame. Instead of improving the performance of these PSEs and cutting losses, more money is being demanded to pay for the losses. Sadly speaking, over Rs300 billion of tax-payers money is being spent every year to keep them afloat.
Unfortunately, the nation is caught in an unending cycle of deprivation, negativity, and frustration. Ideally speaking the country’s economy should be run by professionals who have a deeper understanding about the complex economic issues and are capable of not only suggesting but implementing the solutions to improve the economy. This is only possible if the economy is set free from political influence. Time has come to take tough economic decisions if economic recovery is desired. However, unfortunately, under the current democratic setup, politics not economics wins most of the time.
The writer is Director Szabist Institute Islamabad. He can be reached at [email protected]
