Challenges to the economy

The list of challenges facing Pakistan as per the recent report of the Asian Development Bank is exhaustive: (i) poor governance that effectively indicates the institutional bottlenecks facing the country today ranging from deliberate obstacles placed to circumvent investigation on corruption-related matters, as is evident in the case of Nawaz Sharif and his family, Pakistan International Airlines rising losses, etc, and inadvertent poor performance due to senior appointments made on the basis of nepotism rather than on merit; (ii) lack of economic growth momentum which belies persistent claims by Ishaq Dar, an incumbent federal minister on a three-month leave of absence, that growth had reached levels not seen in the country since decades. These claims were hitherto accepted by international development financial institutions (DFIs) but were consistently challenged by Business Recorder and domestic economists who pointed out the lack of rationalization between statistics released by the Statistics Division and other ministries and credible industry sources; (iii) lack of security and while DFIs are focused on terror-related activities that continue to hamper economic activity in the country particularly with reference to foreign investment inflows yet one would assume that the well established trend to take a dharna to resist government policy, be it legitimate or not, by all sectors and sub-sectors of the economy till the government is forced to capitulate is yet another security situation that needs to be tackled appropriately; and (iv) the need to improve food security.
The report notes the prevalence of hunger and malnutrition due to poverty and lack of economic access to food as major contributors to a high level of food insecurity in the country. In this instance, too, it is relevant to note that a long-term dharna that chokes entry of farm to market transporters can raise the price of perishable items beyond the scope of the poor. The ADB report also notes that antiquated farming methods, and inefficient use of resources contribute to poor productivity - a statement that reflects the failure of subsequent governments to even-out the wide divergence between the mode of farming employed by the majority of subsistence farmers in the country accounting for low national yield per hectare and the technically advanced form of farming by the rich farmers.
Additionally, the inefficient way water is used in the country is a source of rising concern, and Pakistan has been cited in numerous international and domestic studies as an extremely water-stressed country - a ranking confirmed by the World Resource Institute claiming that more than 80 percent of the water available to Pakistan's agricultural, domestic, and industrial users is withdrawn annually, leaving businesses, farms, and communities vulnerable to scarcity. India and Sri Lanka are defined as high-stressed countries with between 40 to 80 percent water available to agricultural, domestic, and industrial users being withdrawn annually. Disturbingly, the report also notes that a shortfall in investment in agriculture infrastructure and research and development also contributed to low productivity.
To conclude, the claims made by the incumbent PML-N administration in terms of its economic achievements have begun to be openly challenged by the DFIs. In the administration's defence, one can argue that part of the blame can be laid at the doorstep of these very same DFIs, particularly the International Monetary Fund, as they, through their feel good statements during the duration of the Extended Fund Facility (September 2013-September 2016) continued to disburse programme lending (budget support) indicative of satisfaction over reforms that, so Business Recorder warned at the time, fail to adjust policies to suit the needs of the economy - a failure that would, in time, generate an unsustainable current account deficit as well as disturbingly low foreign exchange reserves. Growth, the BR argued, was being compromised at the hands of a rigid adherence to a budget deficit target which would impact on revenue collections and require further borrowing. These dire prognoses have come to pass with the country experiencing a 122 percent increase in current account deficit in July-October 2017 and dwindling reserves held by the State Bank estimated at 13.5 billion dollars on 17th November 2017 in contrast to 14.7 billion dollars in 2010-11.