Pakistan’s elections: Old economics, same politics?
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A different kind of thick, unsettling smog hangs heavy in the air – the uncertainty surrounding the upcoming February 2024 general elections in Pakistan. This uncertain milieu, however, is having a chilling effect far beyond the political realm, casting a long shadow on the country’s fragile economic recovery.
Pakistan stands at a moment of reckoning. Markets are nervous, unsure if the elections will be held on time. The current International Monetary Fund (IMF) program, a cornerstone of macroeconomic stability, is maturing in February. Will Pakistan fall back into the economic abyss if a timely handover doesn’t occur? Or, will the new government be equipped to steer the ship toward calmer waters? Who will negotiate the next IMF program, and will they be prepared to make politically unpopular decisions?
The country is simply struggling to find its economic footing. Sadly, the current political discourse seems divorced from these critical economic concerns. As parties gear up for elections, the public debate lacks focus on the issues that plague the nation – the high levels of inflation, low inflation-adjusted tax collection, the ailing energy sector, the bleeding state-owned enterprises, the burden of untargeted or discretionary public expenditures and the crippling lack of productivity in agriculture and manufacturing. All this has left very little fiscal space for public investments in Pakistan’s human and sustainable development. Challenges facing access to quality education and health care impact the development of the future workforce.
Open dialogue is important with businesses, economists and civil society without any further delay. Parties must reach out beyond their echo chambers and actively solicit feedback on their economic plans. Parties vying for provincial governments must also have clear economic roadmaps. Provincial revenue reforms and sound expenditure planning will be crucial for the economic health of provinces; the smaller provinces stand ‘fiscally bankrupt’ as of now.
- Dr. Vaqar Ahmed
But where are the detailed manifestos of political parties, the blueprints for Pakistan’s economic resurgence? Where’s the engagement by political parties with informed stakeholders, the brainstorming sessions with experts who understand the intricacies of these challenges? The musical chairs game by the political class that is seemingly oblivious to the ticking clock and the mounting economic storm, including debt levels that could fast become unsustainable.
Furthermore, the fate of the rather well-intentioned Special Investment Facilitation Council, formed to address the woes of investors, hangs in the balance post-February. Will the new government carry it forward, or will we witness another agonizing shift in Pakistan’s business and investment regulatory environment, another deterrent to much-needed foreign capital?
This uncertainty extends beyond the domestic sphere. How prepared will the next government be to negotiate with the IMF and development partners? If the parties, or the government-in-waiting, are themselves uncertain about the election date, when will they begin preparations for these crucial negotiations? Will they have the courage to make the politically difficult decisions that the IMF and the state of the economy demand?
Reducing subsidies, reforming state-owned enterprises, increasing oil, electricity and gas tariffs, broadening the tax base and improving overall public finance management require strong political will and capabilities to drive change. These are daunting tasks and require a new generation of economic managers not seen in any political party in Pakistan. Can a government born from a delayed or disputed election possess the legitimacy and mandate to undertake such reforms?
The time for indecision is over. The next few days offer a window of opportunity for political parties to demonstrate their economic seriousness. They must act with the urgency the situation demands. Here’s how they can prepare:
Each party has a chance to be on the treasury or opposition benches. They should immediately finalize their economic team, comprising seasoned economists and not the tested lot. To ensure effective and timely execution of a credible medium-term development plan, these teams should have ready reform design, develop feasible financing strategies, and map competent human resources within the public sector for robust implementation. Manifestos should not be hastily thrown together in backrooms. Parties should convene workshops with experts and stakeholders to ensure their economic plans are credible, comprehensive and address the nation’s pressing needs.
Parties should identify members for the crucial Standing Committees dealing with economy and commerce in the Senate, National Assembly and the weakest link – the provincial assemblies. These committees will play a critical role in scrutinizing government policies and ensuring fiscal accountability.
Open dialogue is important with businesses, economists and civil society without any further delay. Parties must reach out beyond their echo chambers and actively solicit feedback on their economic plans.
Parties vying for provincial governments must also have clear economic roadmaps. Provincial revenue reforms and sound expenditure planning will be crucial for the economic health of provinces; the smaller provinces stand ‘fiscally bankrupt’ as of now. The IMF demands more from provinces, and they need to buckle up.
The upcoming elections are not just about who sits in parliament – they are about Pakistan’s economic destiny. The time for empty promises and political posturing is over. The people deserve a clear vision, a roadmap to deal with the economic quagmire. Political parties must step up, demonstrate their commitment to economic revival and earn the trust of a rather stifled market.
- Dr. Vaqar Ahmed is an economist and former civil servant
