Hail Mary: Pakistan’s Economic Option

Majyd Aziz

Pakistanis consider their friendship with China as higher than the Himalayas and deeper than the Pacific Ocean. Pakistanis get overly excited whenever a Chinese dignitary of even lower governmental hierarchy visits Pakistan. Pakistanis look towards Beijing for trade, for investment, and for financial support. However, Pakistanis do not learn economics from their close neighbor. This is one prominent reason why successive governments in Islamabad have not been able to effectively get the nation out of an economic quagmire. What should be learnt from Panda Nation?

China has had a continuous GDP growth averaging nearly 10% for the past 33 years. China’s foreign exchange reserves rose to a record $3.66 trillion and continue to grow. China’s 2012 exports crossed $2.05 trillion and imports $1.85 trillion. How did all this happen in just over three decades? China based its strategy on the Beijing Consensus rather than the much-followed Washington Consensus. China’s three-prong strategy was, firstly, no dependence on loans from international development financing institutions; secondly, to focus on home grown policies; and thirdly, all citizens adopting these policies as their own. Inspite of Western accusations of human rights violation, labor exploitation, and artificially maintaining a cheaper currency, the fact is that China transformed from a regimented, state-owned and centralized economy to a liberalized and progressive economic supremo.

The above narrative has been presented as a source of inspiration for Pakistan’s economic managers. After the imposition of Martial Law by General Musharraf in October 1999, Pakistan witnessed a remarkable period of economic growth for about four years, essentially due to pragmatic and far-sighted economic policies of technocrats in the Cabinet. Much of the mess generated by the disastrous policies of nationalization and fiscal mismanagement of the political governments was cleared and the confidence of trade and industry restored. Sadly, the next five years of the Musharraf tenure, plus five years of the Zardari-led regime, and then the past six months of the Nawaz government, have again been periods when the economy went down in the boondocks.

The grave economic crisis reflects the misguided thinking of policymakers and is a manifestation of self-interest, blatant corruption, and adherence to quixotic populist schemes and projects. Today, the foreign exchange reserves are technically less than a month’s import bill, the exports are stagnant, the currency has made a nose dive, and the economic team was outside the portals of IMF with a bigger begging bowl. The country is facing an electricity demand-supply gap of over 5500 mw, while natural gas supply is regularly curtailed for CNG filling stations, industries, and power plants. Inflation is in double figures, government is printing money 24/7, and the menace of terrorism, extremism, and negative image looms large on the country. 

The way out is for the private sector to be assertive and aim for a Grand Slam home run to get the country out of this economic quagmire. The government, however, is lost at sea and has this notion that it can score a touchdown by depending on the Hail Mary option. Alas, Prime Minister Nawaz Sharif is no Roger Staubach, Quarterback of Dallas Cowboys, nor is Finance Minister Ishaq Dar, the Wide Receiver Drew Pearson. The Hail Mary option worked for Staubach against the Minnesota Vikings in December 1975. It is not going to work for the Sharif Administration.

Originally published in Sharnoffs Global Views. 

http://www.sharnoffsglobalviews.com/pakistans-economic-option-227/