A naïve approach to economy

  • PTI government in search of quick fixes

Imran Khan visited China along with the team of his economic whiz kids. There was talk in the PTI circles about seeking a financial assistance package similar to the one provided by Saudi Arabia. There had also been suggestions to cut down some the CPEC projects. Imran Khan wanted the Chinese to hand him over the formula used to eradicate poverty in China.

What Imran Khan and his team got in return was a reality check. They were frankly told there was going to be no change in the number of projects agreed upon under CPEC. Further, there was no one-size-fits-all formula to end poverty. China on its part had implemented land reforms, gone through more than two decades of austerity with leaders wearing worn out uniforms and sharing transport with subordinates, and had improved relations with neighbours instead of fighting costly wars

The problem with the PTI’s financial team is that it likes to talk about what needs to be done instead of moving ahead and do it. There is no use telling the people, as Razak Dawood did, that the government and private sector must identify potential areas for enhancing exports to China and that there was a need to develop local industrial sectors on modern lines to produce competitive products. Similarly Khusro Bakhtiar harped on the need for an oil refinery in Gwadar to enable Pakistan to reduce its import bill by over $7b. Why don’t these gents, who run the economy, implement these reforms if these are so badly needed?

The promise to double exports to China in FY19 is good but insufficient. What is needed is to double the country’s total exports of which exports to China are a small fraction. Why doesn’t the government focus on measures needed to make exports competitive?

In case the ongoing talks with IMF succeed Pakistan will be able to access IFIs, launch bonds and get higher ratings. But the IMF programme comes with a price tag. Will a government which is morbidly scared of negative public ratings, as shown recently by its failure to punish TLP leaders for challenging the state, be willing to implement harsh conditionalities?