Yet another year without reforms

Much as previous years, this year, too, the government remained fixated on fiscal stabilisation, and ignored the cries for reforms. This is not to say that the policymakers stayed put. The Planning Commission came up with a policy blueprint, "New Growth Framework" and publicised it aggressively. What happened to the NGF is a case study on how frustrating the reforms process can get in Pakistan. The NGF focused on endogenous growth, and made a strong case for developing the software of growth (management, organisation, etc.) rather than hardware (brick and mortar infrastructure). Reforms were proposed in key areas like the civil services, PSEs, domestic markets, and urban management. Notwithstanding genuine critiques, the NGF had the backing of many independent economists and donor agencies. It was formally approved by the Prime Minister at the NEC meeting in June this year. Buoyed up at this, the Commission started developing consensus on proposed reforms among stakeholders, both within and outside the government. Implementation of the reforms process was supposed to follow that. For his part, Dr. Nadeem ul Haq, the deputy chairman of Planning Commission, is regularly holding "road shows" to create awareness of economic issues and generate interest for reforms among the academia, business community, media and the broader civil society. Yet there is a growing perception that the NGF has lost its momentum and is on the verge of going into archives. The foremost reason cited is the lack of political ownership. "Various measures proposed in the strategy, e.g. removing subsidies and protectionist policies, were painful to implement. The political leadership was repulsed as these reforms had political costs attached to them", an informed observer told BR Research. The finance minister, who sources say had initially favored the NGF, later backed away when it became obvious that his government wouldn risk sacrificing more political capital in the wake of crippling energy shortages and economic meltdown. "Finance ministers are judged on the basis of painful decisions they have to take, yet Mr. Shaikh could not take the growth strategy for discussion once in any cabinet meeting despite the PMs nod. Naturally, the line ministers did not pay much heed to the strategy either", lamented another observer. However, Dr. Nadeem differs with this perception. "I believe that meaningful reforms are possible only if societal ownership is there. If academia, media, and civil society create pressure for reforms, then the politicians cannot ignore that", Dr. Nadeem told BR Research. At this stage, it would be rather outlandish to expect any significant reforms from this regime whose economic management is defined by stop-gap measures, reactive policy prescriptions, and firefighting. The deepening political crisis and possibility of snap elections make reforms seem "so out of place". But Dr. Nadeem is not downbeat about the prospects of reforms. "Implementing reforms is a long-drawn-out process. Our agenda is for the long haul. We are not disappointed, and well continue the pursuit". In any case, next two years are going to bite even more. One government would depart and leave behind a nearly ungovernable economy and an indolent bureaucracy. Many feel that it would take at least 12 to 18 months for new government to achieve some semblance of normalcy. Things don look good, at all!