Sustainable economic development necessitates the ready availability of electricity, development of road, rail, port and communication networks and adequate supplies of fuels that drive industry.
The Pakistan Infrastructure Report published by the State Bank of Pakistan in 2010 highlighted that maintaining economic growth of higher than six percent necessitates "investment in infrastructure amounting to about seven percent of GDP."
But with the fiscal deficit already threatening to climb beyond seven percent of GDP, the governments ability to spend on big projects is severely limited. Ambitious allocations to the Public Sector Development Programmes (PSDP) have been followed by massive cuts in subsequent months, in each of the past five years.
After peaking in the FY06-08 period, investments from public and private sectors have also been trending lower since. Clearly, the governments ability to fund large-scale infrastructure development is limited; unless it can provide some out-of-the-box-solutions. But incoming legislators do not need to start from scratch; many of the policy prescriptions are already waiting for implementation.
The above-mentioned report by the central bank had laid out a comprehensive strategy for tapping public-private partnerships. It has highlighted key institutions that need to be developed such as the National Infrastructure Development and Financial Institution (NIDFI). Unfortunately, that Report has been gathering dust since former governor SBP, Saleem Reza left office.
Similarly, former finance minister Shaukat Tarin had spearheaded the development of a plan whereby a supra-board of directors made up of competent private sector professionals would restructure the public sector entities before their privatisation. Such revamping prior to privatisation would ensure that government is able to reap better returns from the privatisation and also set each entity in the right direction.
Former SBP Governor Ishrat Husain has also presented a comprehensive plan for restructuring of the bureaucracy. If implemented, those recommendations can help cut red tape, improve competency and hack away at corruption.
In short, the policy measures needed to cure the prevalent ailing state of the economy are all out there. All that is needed is political will for their implementation. The sliding economic indicators warn that the clock is ticking. The incoming government would be well-advised to use the upcoming budget announcement as an opportunity to set a medium term agenda of economic reform and growth.
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