By Naqi Akbar (Exclusive)
KARACHI: Budgets around the world of nation states are accounts statements of the government in power. They are supposed to lay bare before the populace, how the revenues are to be mobilized and in which way, the system will be run, a delicate balance of responsibilities in the form of taxation; direct and indirect and consequent facilitation by the government to allow the common man; at micro and macro level, go about with his life without fail; specifically in the economic sense. The governments all over never resort to a habitual handout program; rather tend to make things easy enough for the common man to earn enough to be above the poverty line and is able to lead a respectable standard of living. Here in Pakistan, they are dampeners to any bid of economic recovery.
These prerequisites are regretfully absent in the case study of Pakistan. Here without taking the respected readers into a complex jigsaw of facts and figures, the dominant trends will be studied and analyzed in a bid to understand what are ills and what can be the way out.
Pakistan inclusion into the geo political schemes of the Pentagon and now increasing coziness with the Chinese geo political maps have been one of the reasons that the economic growth planning and facilitation of the growth led strategy have never been the first priority of the nation state, managed directly by the deep state after October 1958.
Pakistan’s first arrangement with international donor agencies like IBRD and the IMF dates back to the 1960s, when the two-gap growth strategy based on foreign exchange gap and saving and investment gap was touted as the best possible option for the country, just becoming independent. Initially, it was not supposed to be addict to the doses of foreign assistance, but the debacles of the 1965-1970 third five-year plan opened the room for a continued relationship with the IMF.
It was no coincidence that the left-wing PPP government under ZAB not only devalued the Rupee to the tune of 131 percent, but also agreed to remain in the western defence pacts like the CENTO and SEATO till their natural demise in 1979 after the fall of Shah.
Fast forward to the period after Zia ul Haq 1988 till present. The first 11 years of democratic interlude from fall 1988 to fall 1999 were characterized by increased intervention by the IMF, for what it proposed the correction of resource mobilization mechanisms at work. The period can be characterized politically as the one, where the deep state was instrumental in dislodging political governments before the completed their terms and finally it shed its inhibition with the staging of October 12, 1999 military coup. Initially internationally cornered, the military dispensation soon found the cause to live with the free world in the form of post 9/11 security paradigm.
That period, characterized by the creeping return of the deep state into the corridors of the power hold true to the developments to date; especially the role of a client state and its formalization on day-to-day basis in the form of a unique ‘hybrid’ setup. The period during the Musharraf hold on power was deceptive on the count that the compliant central bank through a jugglery of expansionary monetary, where every other man was ordering a residence or a automobile to what can be called ‘enjoying the deceptive increased purchasing power’ without any actual tangible increase in the real purchasing power of the common man.
Coming back to the era post 2008, the terms of the PPP and PML N at the center gave the deep state enough time to create a hybrid set up, where the political power was a mere figure head to be managed by the deep state from the background in the post 2018 political arrangements.
That period was characterized by too much emphasis on accountability to the point of shying away key investment decisions, coupled with central bank management of the exchange rate, which even the most developed economies the world over cannot even think of experimenting. The overall hi cost nature of the Pakistani mode of doing business coupled with the erratic rather unpredictable exchange rate regime played havoc with any chances of real economic growth, sans the one proven with the dubious rearranging of the economic statistics.
Today, after many years, with the new hybrid partners in the corridors of power, the country’s economic recovery prospects are in shambles. True, Pakistan has facilitated a few Chinese brands in the aviation industry, but its trickle-down impact on the Pakistani economy is nowhere to be seen, specifically in the defence industry-driven engineering vendor industry.
The economic reporting of the state institutions in the form of Economic Survey or the State of the economy reports published by the central bank could not hide the sorry state of affairs that most the sectors showed dismal performance. The industry and the agriculture were equally in shambles, down from the cost of inputs to the supposed support from the state; specifically in the form of support price for the agriculture sector.
Such an economy which is not growing squarely depends upon handouts from the donor agencies like IMF. The IMF sensing its decision pushing clout pushes the governments towards what is happening as pushing the economy more towards exposure to the indirect forms of taxation under the IMF inspired imperative of greater resource or revenue mobilization. Likewise haphazard pushes for direct taxation reforms, while offering little for the actual increase in taxation revenue, has contributed well to shying away the investor or the businesses to actually plan any growth led decision in the economic set up. It is a vicious circle of compliance to IMF which pushes the economy further into the ‘cesspool of stagflation’.
What is happening is that while the indirect taxation accounts for much of the resource or revenue mobilization; in the process increasing the cost of living and doing business, the inefficient state structure; rather an oppressive state structure is being fed with regular dose of salaries, which are increased in every year budget.
The emerging picture of a client state is that while the oppressive status quo is tolerated by the IMF for its own repayment or economic decision-making reasons, the economic recovery is being put on the back burner. Coupled with that the inefficient nature of the state, the logical road map for that nation state regretfully is social and political unrest; not attributed to this or that political movement, rather it has the chance of becoming a popular uprising against the system itself.
How such an eventuality might be a far-fetched reality, however the current state of affairs can only fuel increasing disparity between the have and have nots; a politically oppressive system of government and dismal economy on the patterns of Egypt. A client state might be able to hold on to new geo political opportunities, but that is not the short cut to economic growth and turnaround, vital to keep the nations state intact.
