A dismal outlook for 2012

By Imtiaz Gul

The latest State Bank of Pakistan (SBP) annual report highlights Pakistan’s institutional weakness at all tiers of the government — judiciary, civil services, law enforcers, regulatory bodies and accountability agencies — all of these are directly responsible for poor economic growth in the country.

The report, released on December 19, also expresses multiple concerns surrounding the economy, attributing the institutional weakness to the extremely poor governance indicators and to the deteriorated business environment. This way, says the report, Pakistan performed the poorest of all South Asian neighbours.

According to the Doing Business 2011 – Making a Difference for Entrepreneurs survey carried out by the World Bank and the International Finance Corporation, Pakistan dropped eight places in the list of the best countries for doing business, slipping from 75 in 2010 to 83 in 2011.

The SBP reports also draws on the survey to underscore the need for drastic measures to fix some of the most pressing problems that Pakistan faces.

“Both domestic and global factors are responsible, but we believe that domestic issues are more decisive and chronic. These include the collapse of fixed investment, acute energy shortages, urban violence and lawlessness, poor physical infrastructure and institutional fragility,” observes the report.

It also points to the loss-making public sector enterprises which “continue to haemorrhage and drain scarce fiscal resources. Railways, PIA and Pakistan Steel are classic examples of the heavy cost of poor governance to the economy”. It adds that “Pakistan’s political leadership must take credible steps to stop the slide”. But who listens to the State Bank and who is interested in stemming the slide?

Why would dual nationality-holders be committed to the interests of Pakistan or its hapless people? If they were, there would most probably be: a) No rental power plants; b) the Tethyan Copper Company, involved in Reko Diq project, wouldn’t face cancellation of its mining and processing licence and forced to go for arbitration; c) no shadow ministers and heads of government entities cutting shady deals; d) far less load-shedding; e) far greater and serious attention would be on streamlining internal security mechanisms rather than obstructing the traffic of goods and people through concrete barriers; f) better management through professionals rather than cronies; g) people-focused policies to protect them from the food and oil cartels that have contributed to the crushing inflation; h) and no compromises with religio-political bigots who are responsible for much of Pakistan’s political isolation and infamy across the globe.

Alarmingly, the forecast for 2012 is not encouraging at all. The balance of payments has never been worse. International oil prices are likely to soar beyond $100 per barrel. Debt servicing, according to estimates placed before the National Assembly recently, will cross a whopping $4.2 bn, with no hope of a substantial cut in the defence and internal security budget that currently stands above $9 bn.

Tens of millions of Pakistan’s poor will be the direct victims of this crisis, which will not end until the ruling elite puts an end to squabbling for personal gains. It will only aggravate the country’s socio-political adversity if it continues courting religio-political alliances such as the MMA, which has little concern for the common man.

Pakistan’s mighty military establishment has interfered in the political process. It must not do so anymore. Nor must politicians act like vultures who are slicing away whatever is left of the land called Pakistan.

Source: A Dismal Outlook for 2012