Standstill ministries

Uncertainty has its repercussions. Stock market reacts immediately to hazy situation and usually recovers with a lag once the dust settles - this happened in Musharraf era and history is repeating itself, as PM Nawaz Sharif awaits verdict.

For the past few months, virtually the entire cabinet and ministers are either busy defending the PM and his family or are waiting for the verdict. Now whatever is the decision, once it’s taken the focus of government may come back to what they are supposed to do i.e. running the country’s affairs.

The good news is that there is no problem on the expansionary projects in execution phase - be it government related power or road infrastructure projects or private sector expansions including cement, steel and auto sector. The problem is at the policy level which is at standstill - private sector has halted the decisions which were in the planning stage while the state institutions are in real bad shape.

The problem with PMLN government is that they do not trust relevant qualification and experience when it comes to running key institutions. They rather rely on the close confidants of top leadership. The PM trusts his accountant on managing economy who is with him for ages. Dar in turn trusts his youth pals for running key institutions such as Hijazi at SECP and Saeed Ahmed at NBP.

The system works as long as the power at top is unshaken, although institutions lose their independence in the process. But now both of Dar’s best mates are in hot waters, and the institutions suffer the process. The case is not much different for the SBP - where in the absence of Dar’s man, the acting Governor did what he was supposed to do. But letting the currency depreciate a little was enough for Dar to expedite the process of new governor appointment.

Bottom-line is that the government has simply not being proactive in handling the economic and foreign policy challenges; the country is facing because of the political chaos. For example, the US hostility towards Pakistan is increasing. Pentagon is mulling sending additional troops in Afghanistan. India is actively lobbying against Pakistan in Washington while Islamabad does not even have a reactionary policy; forget about being proactive.

Exports have plummeted to multi decade low in terms of GDP; but there is no sense of urgency in finance, commerce and textile ministries. In case of curbing imports, the SBP is not allowed to use exchange rate as a policy tool to adjust. And the list goes on. The decision should come soon, one way or the other. The economic and foreign policy management should address the challenges with or without PM Nawaz.