Pakistan is still not stable because the country has not yet made a successful transition to democracy. The economic downturn on a global and national scale coincided with this transition. Political paralysis persisted in the first two months of the new government coalition because of political impropriety. Members of the military have come out and said they support the current government, while the International Monetary Fund (IMF) keeps pushing for strict budget cuts. The IMF has made it clear that for Pakistan to get the next $1 billion payment from its Extended Fund Facility, gas and electricity prices must go up and the budget deficit must go down. It is important to get the IMF program going again if you want to find global and bilateral partners and avoid a balance of payments disaster.
The PML-N coalition has increased energy expenses. Any average Pakistani will be affected by these plans, but they will help bring down the budget and current account deficits. The inflation rate of 13.8% in May was the highest in almost a year, and it is predicted to exceed 20% this year. Pakistanis are facing higher energy expenses and power interruptions this summer.
The PML-N desires that the army and other powerful organizations collaborate on economic transformation. Shehbaz Sharif has pushed for the creation of an Economic Charter to help the whole country agree on how to improve the economy. It’s politically unfeasible right now, but it’s a good idea. For Pakistan’s long-term political and economic stability, the current federal and provincial governments must do more than put out fires and start reforms in agriculture, energy, and local government. It is political savvy.
The authorities of Pakistan must acknowledge the country’s historical crossroads. Ironically, former Pakistani prime minister Imran Khan now opposes the current administration and military authority. Khan enjoys middle-class and “anti-elite” elite backing. Gallup Pakistan surveyed secondary school graduates in April and found that 62% were “angry” at Khan’s removal. Khan’s claims that he was removed from power in a “regime change” operation backed by the U.S. struck a chord with this group because of their strong dislike of the U.S. But they support more than that. Khan takes advantage of their discontent with the status quo.
High unemployment and rising prices have harmed the Pakistani middle class. According to the Pakistan Human Development Report 2020 published by the UNDP, the per capita income of the middle class grew more slowly than that of the total economy in fiscal years 2013-14 and 2018-19. (1.2 versus 1.8 percent) From 2007-2008 to 2018-2019, the unemployment rate for those with a bachelor’s degree or more rose significantly. Despite the rise of universities in Pakistan, fewer students’ majors correspond to their interests. What businesses want and what Pakistani graduates want to achieve are not the same. The current government is cutting support for everyone in order to give cash to the poorest people. This may threaten the economic stability of the middle class. This may have global and political ramifications.
Khan’s claim that the Sharif government doesn’t want to implement a deal has made inflation and national sovereignty worries worse. Khan asserts he purchased inexpensive Russian oil to placate Washington. The economy of Pakistan is thriving, but only for the rich. Due to policies that favor the country’s civilian and military elite, the economy hasn’t grown in a way that is steady, fast, and fair.
The Pakistani academics led by Dr. Hafiz Pasha, who did the UNDP research mentioned, do a great job of breaking down Pakistan’s political economy. In 2017–18, Pakistan’s business, feudal, and military elite got “benefits and privileges” worth $13 billion, or 7% of GDP. Reform is time-intensive. Pakistan must use this “shock” opportunity to reallocate its resources. Time is limited. Population growth and climate change will compound Pakistan’s challenges. Given its current growth rate, Pakistan will stay among the top 10 most populous countries in the world.
To accommodate its rising population, Pakistan needs a strategy for rapid, equitable economic development. Pakistan imports more energy than it exports. Recent economic growth has been driven by consumer spending and exports. When growth rates reach 6 percent, the economy of Pakistan overheats. The present government must place exports, agriculture, and home problems at the top of its agenda. From 2014-2015, yearly growth in Pakistan’s agriculture has been less than 2 percent. The global food supply problem is getting worse because the agricultural sector is shrinking, the population is growing quickly, water stress is getting worse, and climate change is getting worse. Agriculture adds to the backlog of the electrical industry. Pakistan pays hundreds of millions of dollars annually on agricultural tube well electricity subsidies. The country imports edible oils.
In recent years, the Pakistani government has discovered solutions to its problems. Linking low-interest loans for the construction of solar tube wells to high-efficiency irrigation systems or allowing net-metering could help save water, cut costs, and reduce greenhouse gas emissions. Pakistan’s federal and provincial governments should make it easier for private companies to grow seeds and make edible oils. As Pakistan’s gas and oil supplies get lower, it will be more likely that global fuel prices will go up. It has to look into how green hydrogen and ammonia can be made in southern Balochistan and help people look for energy there.
Streamline the “last mile” of government in Pakistan. Pakistan’s political leaders like how China runs its government, but most people don’t understand how important decentralized power and local autonomy are for the economy. The fact that Pakistan’s lawmakers worked together to pass the 18th Amendment, which gave more power to the provinces in government matters, is a credit to them. Many people are against local autonomy, and state governments often put off municipal elections. Metropolitan areas like Karachi can’t issue bonds because they can’t set up their own municipal governments. The deals that the elites of Islamabad have made among themselves are not enough to keep Pakistan’s government stable. It also pushes for improved government responsiveness to citizen requests and “last mile” administration.
The writer is a columnist and can be reached at gulnaznawaz1551@gmail.com
