Though we may not be making meaningful progress towards needed structural reforms, but we are acquiring a much better understanding of the nature of deep-seated problems and how to resolve them. Not only that, to recall a quote, ‘the principles of good economic policies are well laid out’.

It is now widely recognised that our existing economic model is no longer working and is worsened by the false dynamics of the national political system. Since economics and politics are two sides of the same coin, it is argued that an integrated approach is imperative to pull the country out of its multiple crises.

Instead of attributing our failures to external shocks or outside forces, we now increasingly acknowledge we are ourselves responsible for the dismal state of affairs. We suffer from external shocks more severely because of our unsustainable foreign dependence. We are living much beyond our means.

Geopolitical tensions heightened by the Middle East conflict pose the biggest threat to the world economy right now, but other risks are also at play, says World Bank President Ajay Banga, adding, ‘I think the impact on economic development is even more serious.’ We will not remain immune from the shock generated by global geopolitics.

Instead of attributing our failures to outside forces, we now increasingly acknowledge we are culpable for the dismal state of affairs

International economic sanctions put free trade on the back burner, as in the case of our trade and economic ties with Iran.

Describing the existing situation as worrisome, Nawaz Sharif says there was still hope and “we should not let it slip from our hands as we are capable of fixing it because we spoilt it ourselves.” The country has to get back on its feet, as nobody else will lift us up. He was, in fact, voicing the sentiments of a large segment of informed public opinion.

But Nawaz did not share a roadmap in his Minar–e-Pakistan speech — though his party had promised — to pull the country out of the economic quagmire. He, however, called for harmony among all constitutional institutions and political players for the betterment of the country. In a meeting, the PML-N on October 22 decided to re-establish ‘close coordination’ with its allies in the former coalition government with no known formal agenda.

Now, the most challenging problem is to overcome the resistance to change. Social change begins when the voiceless have a say in the corridors of power through free and fair elections

preceded by a pre-poll level playing field. It is clear that the majority of Pakistanis are impatient for change, says an eminent analyst, asking how many more years it will take to be autonomous in financial matters.

Over the last two years, bank investments in government securities have increased by Rs7.4 trillion, exceeding the total increase in bank deposits of Rs5.3, says analyst Syed Asad Ali Shah. The government’s budgetary rupee needs (fiscal deficit) are far more than the increase in total deposits made by the country’s citizens in the banking system. To reduce the fiscal deficit, Mr Shah suggests that the redundant departments and agencies that do not add value and are cost-ineffective need to be closed down.

No doubt, entrepreneurs with a futurist outlook are opting for the latest technologies with a focus on intellectual inputs and human skills to improve their performance and move with the times. The process needs to be speeded up by removing all hurdles.

Nothing is possible without democratic political stability and a credible government, says former special assistant to the prime minister Zafar Mirza. We need to, first and foremost, set our priorities right. Investing in people should be our first economic priority as this brings the highest rate of return.

He noted that human development is sliding further, and our abysmal health and education indices are a stark testimony to an economic model which isn’t working. A recent survey shows that only 28 per cent of the women engineer graduates are employed.

At a conference on ‘The Constitution of Pakistan: Lessons for the Next 50 Years’ held in Islamabad, constitutional experts noted with concern that even after 50 years, there are no rules of business for the Council of Common Interests.

The voiceless need to have a say in the corridors of power through free and fair elections preceded by a pre-poll level playing field

The succeeding National Finance Commission(s) (NFC) have struggled to reach a consensus and implement awards within their stipulated time period. They suggested subordinate legislation to govern NFC awards. The centre’s failure to transfer devolved departments under the 18th Amendment has reduced federal fiscal space.

A chapter may be added to the constitution, they suggested, to ensure the protection of powers (as redefined under Article 140-A) of local government and elections at regular intervals.

According to the State Bank’s annual ‘State of Pakistan’s Economy’ report for FY23, the provincial fiscal accounts deteriorated, and the budget surplus could only reach 20.6pc of the Rs750 billion target envisaged for that year. Amid a fiscal crunch, the Khyber Pakhtunkhwa government was reported on October 25 to be mulling massive pay cuts for its employees.

Growth in provincial revenues decelerated to 13.1pc in FY23 from 25.7pc in the previous year, attributed to a lower provincial share in federal revenues and a decline in provincial own revenues as a proportion of GDP. The current expenditure grew sharply, development expenditure slowed down, and the growth in provincial expenditure decelerated to 18.6pc from 27.0pc.

Published in Dawn, The Business and Finance Weekly, October 30th, 2023