Micro economic stability?
Perhaps World Bank President Jim Yong Kim’s meetings with private sector representatives will be more enlightening than his sit-down with the prime minister regarding just what degree of ‘micro economic stability has been achieved due to the policies of the present government’. They not only remain hamstrung by the continuing power and gas crisis, but have also long been crowded out of the money market. And the so-called tax reforms that Kim appreciated have, on the contrary, caused quite a stir at home; coming as they do after the PML-N was simply unable to enhance revenue through conventional taxation.
For some time now international financial institutions, particularly the Fund and the Bank, have been blatantly political in their outlook. They are willing to reschedule, even write off, loans when states are compliant with Washington and Brussels; and not wary of a degree of visible arm-twisting on other occasions. Islamabad knows well by now just what sort of political climate draws which particular kind of response – like the isolation of the ‘90s, then the largesse after 9/11, and a degree of elbow room now, when there is a need to show that the west will not disengage from Pakistan like before especially so long as we facilitate Afghan peace.
That is why IMF bosses gladly agreed to downward revision of particularly all important indicators in all meetings of the Extended Fund Facility (EFF). And that is most likely why the World Bank is all praise and eager to participate in the takeoff that will presumably make Pakistan an Asian Tiger, etc. But since the Bank engages in development projects only, it is unlikely to help circumvent procedural and practical bottlenecks that have dried up private investment. As things stand the economy will hold so long as the external environment is conducive – like cheap oil, CPEC, etc – but little, if anything, has been done to stimulate exports or investment. That means policy-driven micro as well as macro economic stability is yet to be achieved.