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Old Friday, November 11, 2011
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ABDUL JABBAR KATIAR has a spectacular aura aboutABDUL JABBAR KATIAR has a spectacular aura about
Default Confusion as policy

By S. Akbar Zaidi |
DAWN, 11/11/2011

IT is difficult to make sense of the incumbent government`s economic policy. There is little which exists as such it is more a meandering through but what does take place as policy, shows much confusion and the inability of the economic team to take key decisions.

The recent confusion over whether India has been granted MFN status, and Pakistan`s dealing with the IMF, seem to be clear examples of this confusion as economic policy.

Unlike his predecessor, the finance minister is not prone to giving too many interviews and seems to prefer being out of the limelight. This ought to have gone to his credit if one knew what it was that he was planning for Pakistan`s economy.

Unfortunately, the finance minister`s silence and absences give rise to speculation which, once in the public arena,gives rise to contradictory assessments of the government`s plans.

Pakistan`s $11.3bn agreement with the IMF, in abeyance since the foods of 2010, has now been officially ended, with the $3.7bn not being disbursed bythe IMF. This is not something new, for Pakistan has only completed one IMF programme, and not because of better management as the Musharraf economic team continues to argue, but because of fortuitous external economic circumstances after 9/11. Hence, the culmination of the 2008 IMF programme has come as no surprise. What is problematic is the way the programme has ended, and the confusion and ambivalence regarding Pakistan`s position.

Was Pakistan`s government interested in continuing the IMF programme, or did it prefer to end it? Looking at various statements in the press by the incumbent economic team, one gets two very different sets of answers, usually from the same individuals being quoted at different times.

On the one hand, we have been toldthat Pakistan has not been seeking an extension of the now defunct programme from the IMF, on the other, the ever-vigilant media has been reporting on `secret` meetings between the finance minister and his economic team with the IMF trying to get the loan extended.

Why should there be ambiguity about whether the meetings were held and what was proposed? IMF programmes are very public documents and are available on the web. Why is there a need for a cloak-and-dagger type of approach from Pakistan`s economic team? Or was it the IMF which wanted the meeting to be secretive? The outcome of the different sets of meetings seems to be that Pakistan will not continue with the programme. Fair enough. But what we don`t know for sure is whether it was the IMF which told Pakistan that unless some key reforms were taken it would not extend the loan, or whether Pakistan told the IMF that it wanted to abandon the agreementbecause of its failure to comply with the conditionalities imposed. It matters a great deal to know who agreed to end the programme first, and why.

Some assessments suggest that it was Pakistan which told the IMF `to get lost`, but the question is: why do we not know for sure? Why is there so much secrecy and ambiguity about such a major decision? Is Pakistan`s economy in such a good state that Pakistan`s economic team can tell the IMF to `get lost`, or is the real reason that Pakistan`s government just cannot meet the conditions at the start of its election cycle, since most of the conditions would cause hardship and result in votes being lost? Why the programme was ended needs closure too, and some sort of transparency from all concerned would help end the ambiguity, secrecy and confusion.The way the MFN (most favoured nation) decision was handled, is equally confusing. No one can answer a simple question: has India been granted the MFN status by Pakistan? Sometimes Pakistani officials say that it has, statements which are contradicted in the same article in the same newspaper.

The granting of MFN status to India has major repercussions, and better trade and economic relations with India can be a game-changer for Pakistan`s political economy. But we do need to know what it is which passes as government policy. If they cannot answer a simple, straightforward, uncomplicated question about whether India has, indeed, been granted the MFN status, when all responses are in political doublespeak, you know one is not in good hands.

There are other, less significant, examples of confused statements regarding Pakistan`s economic policies, as well as its governance and political policies.

Whether it is the local government sys-tem which one? Does one still exist? or about privatising Pakistan`s railways, airline or steel mills, there is confusion and ambiguity about what the government wants to do. Within a matter of a few days, one can find state-ments from the same individuals, at first confirming, then backtracking, and finally confusing the issue concerned.

One reason, of many, which suggests that military regimes far outperform civilian governments in terms of the economy is that military governments at least have some direction, purpose and policy. While they are clearly authoritarian, they do tend to be more `stable`, in contradictory ways of course, but they do give clearer indications about intentions.

Having wide-ranging discussion about issues in parliament is one thing and is the substance of what differentiates democratic from authoritarian regimes, but, so it seems, is the ability to make consistent statements and policies about what needs to be done. • The writer is a political economist.
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