Pakistan is blessed with immense resources, human capital, and geopolitical position but marred by persistent politico-economic instability and leadership crisis. The country has seen many prosperous periods and passed through the toughest challenges, but the resilient nation has braced all these with open arms. However, the prevailing impasse is far more daunting and scarier as the country faces multiple crises from within and outside. Many experts have given proposals/suggestion to put the country on track, and decision-makers are searching for ways & means to formulate a viable course of action.

The prevailing crisis is multi-dimensional and needs a wholesome approach to political economy.

Starting with the first-ever industrialization in the 1960s, including the military industry, OGDC, and later Steel Mill, Pakistan was on the road to economic progress and development. Despite the traumatic experience of 1971, the Pakistani nation rose from the ashes to socio-economic emancipation due to the Gulf Bonanza and the petro-dollars.  However, the nationalization process, unending political crisis, and the Afghan Jihad undid the gains in the political economy. Despite extreme political polarization, the 2nd industrialization in the 1990s somewhat put the country on economic recovery. In the aftermath of 9/11, Pakistan became part of the Global War on Terror and was embroiled in Afghanistan, resulting in terrorism and slow-down economic effects with political divide. The country witnessed unprecedented political and economic stability during the mid-2000s with mutual political accommodation, smooth change of command, and institutionalized role of national organs. The China-Pakistan Economic Corridor (CPEC), a flagship project of the Chinese Built and Road Initiative (BRI) with a $52 billion investment, was seen as a game-changer for Pakistan. Still, again, the internal and external maneuverings have put dark shadows of uncertainties. This has been further accentuated by the danger of default and signing a deal with the IMF.

The persistent weak political economy has given birth to high inflation, increased poverty, worsening living conditions, loosening state control, illegal economy, and uncontrolled cartels. Presently, Pakistan has a growth rate of 0.29%, the trade deficit of $48.35 billion, foreign debt of $124 billion with only $9.5 billion foreign reserves, budget deficit of Rs.7.8 trillion, circular debt of Rs.2.6 trillion, corruption cases of Rs.1.2 trillion, very low FDI and investment, devaluation of currency, less tax revenue collection and very high illegal trade on Pak-Afghan, Pak-Iran and Pak-India borders. This is studded with high government spending and reports of IMF loans being spent for political ends.

What should be done to this grave situation? Should the nation wait and see the inevitable coming fast with untold miseries, or should it plan and execute collectively to prove its resilience again? Following are some of the corrective measures, reforms, and hard decisions to be taken by the state, government, business groups, and society as remedial to put Pakistan on the road to politico-economic recovery.

The main responsibility lies on the state; it has to ensure the rule of law, the working of state organs within their mandate, a conducive environment, and political inclusivity.

The primary task is to hold free and fair elections; a people-mandated government can bring political stability and take long-term hard decisions with confidence and legitimacy.

The new government would have a heavy burden of responsibility, but with consensus and inclusivity, it should be able to sail through. The following steps may prove fruitful;

  • Economic revival should be the top-most priority. Mid-term and long-term economic policies are to be formulated with full inclusivity of the stakeholders and an inbuilt mechanism for continuity.
  • National Accountability Bureau (NAB) should be disbanded forthwith. The bureau has been used for political engineering and victimization. Disbanding would ensure confidence in the working by all the stakeholders.
  • Red-tapism in decisions and executions must end; many policies remain unimplemented for years, which results in inaction.
  • Corruption has become a major issue that requires a national resolution: announce amnesty for all those who voluntarily deposit illegal money.
  • A fully documented/digital economy will be introduced through consensus legislation as practiced by many developing economies.
  • A transparent privatization process with a bipartisan parliamentary committee, including businessmen and technocrats, should be initiated. Many state institutions have become a liability; an objective privatization can lead to lesser financial constraints.
  • Corporate culture to be introduced in the public sector organization for efficiency and improved work environment.
  • Empowering Local-body institutions would lead to the effective implementation of hard decisions at the gross-root level.

Some of the more practical measures would be to bring reforms in the state institutions;

  • Benazir Income Support Program (BISP) has the largest allocation of government funds to Rs.450 billion, distributed to poor families. This process is not producing the desired results. Instead, Pakistan should adopt the SME model of Bangladesh, or the cottage industry, to create local business opportunities for these families to make them self-reliant.
  • To end foreign currency hoarding, amnesty should be announced to deposit unaccounted money; afterward, all air and surface borders should be sealed for one week to extract illegal foreign currency with exemplary penalties/punishments.

Other measures that can generate additional revenues are;

  • Encourage local/barter trade on all borders, which would also provide a livelihood to the local population.
  • Religious tourism is another neglected area; millions of Pakistanis go to the Middle East for religious visits. Institutionalization, better facilities, a conducive environment, and fast-track operation can enhance revenue generation.
  • Blue Economy (harnessing the potential of oceanic resources) is another neglected area; it is claimed that this medium can generate billions of additional revenues with prioritization and effective policies.

No government can work without the effective cooperation of business communities, as these are the real backbone of the national economy.

This important segment of society has to share the national responsibility. They can contribute by honest tax deposits, end hoarding, adopting reduced market times, and lesser profit margins. In the end, the people of Pakistan are affected, and they would look to the above hard decisions before making further sacrifices. However, they must adopt financial austerity, conserve energy and food, change shopping habits, and avoid unnecessary buying.

The successive failures and incompetence cannot be undone within days, and no magic wand can turn around everything within no time. As an efficient state, a vibrant entity, and a resilient nation with good governance, Pakistan can bring positive changes in the years to come, provided they have the resolve and will to do so.

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