Need stressed for mainstreaming of governance reform

The Deputy Chairman of Planning Commission, Dr Nadeem-ul-Haq, has said that reform of governance and markets needs to be very seriously mainstreamed for addressing both macro-economic and growth issues. Addressing the 26th Annual General Meeting and Conference, he said: "Pakistan's growth strategy has been put on the backburner by continued preoccupation with the multi-faceted crisis".
He said that the government had expanded its market role through inefficient public sector enterprises (PSEs) and poor regulation, which slowed down innovation and entrepreneurship. "Poor quality governance has dented productivity and increased transaction costs, making things uncompetitive," he added. He said that macro-economic stability had remained elusive, and inflation stayed in double digits for about four years.
"Despite efforts, the fiscal deficit remains beyond levels that would be considered sustainable. Not only is debt growing rapidly but State Bank of Pakistan (SBP) financing of the deficit is also contributing to inflation," he added. He said that despite some privatisation and liberalisation policy, the public sector and the government continued to pervade the markets through loss-making public sector enterprises and excessive regulation, at the cost of productivity, growth and employment.
"Our growth remains volatile, averaging about 5 percent per annum, and we need a sustained growth of about 8 percent to become a middle income country," he said, adding that without sustainable growth, continued fiscal crisis, a bloated public sector that places pressure on the budget and lowers productivity and growth, welfare indicators such as poverty and the Millennium Development Goals (MDGs) were not showing improvement.
"A large percentage of our population remains clustered around the poverty line, swinging in and out of poverty trap, with every dip and rise of the growth rates," he said. The President of Pakistan Society of Development Economists (PSDE), Dr Rashid Amjad, said: "Macro stability is a prerequisite for sustained growth and for building investors and donors' confidence, and must remain an avowed aim".
"The 18th amendment is democracy's gift to the people of Pakistan and a vigilant and free print and electronic media together with an independent and strong judiciary is the best guarantee for ensuring transparency and good governance," he said, adding that these are essential ingredients of a vibrant economy.