When budget season rolls around again, the discussion is sure to turn to big money. Words like Arab billions (not to be confused with the Saudi benefactors we’ve been waiting for) are accompanied by arguments like “primary deficit,” “slump” and “principal payments.” For many of us, these terms may be in a foreign language, which can make the whole process feel foreign and inaccessible.
The economy is undoubtedly an important issue, but the conversation about it remains among the elite, who seem to have no common interest. As someone who considers myself among the economically ignorant masses, I struggle to understand the complexities of our financial system, especially in a country as complex as Pakistan.
CONTRARY ECONOMY
Pakistan’s economy is in a fragile state, challenged by the instability of civil-military relations. However, every new political party that came to power has avoided disaster and considered its economic management successful. If these efforts succeed, we can only imagine how they fail.
There has been little change in our economic strategy, apart from the finance minister indicating that the IMF can be resisted. In 2018, our “solutions” mostly consisted of hoping for some miraculous foreign aid or investment to bail us out. During PTI, Ishaq Dar believes that exports will increase after the exchange rate policy is abolished.
However, after years of punishing currency depreciation, it became clear that exports alone could not save the country. The latest focus is attracting foreign direct investment (FDI), but that too seems like a pipe dream.
Foreign investment
Mantra now has a GDI center with the hope of attracting foreign investment. However, little has been done to create an enabling environment for such investment. This approach is counterproductive as the harsh reality of monthly utility bills vividly reminds us of the disconnect between lofty economic aspirations and the daily struggles of ordinary Pakistanis.
Despite the steady rise in prices, there has been one change since PTI’s strained relationship with the HPG: the finance minister openly admits to bowing to the HPG’s terms.
When he stressed that tough decisions are needed, there is a lack of communication with the public, who are tired of hearing what to do without taking meaningful action. The task of persuading the people in the best possible way falls to the Prime Minister, but the lack of real leadership makes the task difficult.
THE GOVERNMENT CANNOT
The current Prime Minister holds the position only because his brother refused it. This fact makes it difficult for the public to trust his leadership. The government continues to repeat the policies of the PDM era even after ousting the former finance minister.
One particular mistake was trying to convince HPG to subsidize industrialists by raising consumer prices. The plan was earlier rejected by the PTI, recalling the proposal to get cheaper fares from motorcycles as car prices rise. This strategy shows a fundamental lack of innovative thinking and relies on failed policies.
The government seems unable to effectively deal with the crisis in the energy sector. Prices continued to rise, putting unbearable pressure on society and leading to street protests. The rhetoric of “hard decisions” rings hollow outside air-conditioned rooms insulated from the consequences of politicians’ actions. Real change requires taxing traders and hauling them into the tax net – a move that successive governments, including the interim administration, have failed to implement.
Claims persist that the economy has “stabilized”. Affirming this is the same as wearing a corset and declaring a significant loss – it may look better on the outside, but the underlying problem remains unresolved. While politicians may be happy with a temporary fix, the public is not convinced by the rising cost of living.
As budget negotiations continue, it is important for the government to bridge the gap between economic and public policy. This involves not only strong decision-making, but also effective communication and a sincere commitment to address the root causes of our economic problems.
Politicians should move away from technical debates and engage meaningfully with the public. This may include public consultation, open communication about economic policy, and efforts to educate the public about the complexities of the economy.
