Status quo can be remarkably immune. Since the onset of Covid-19, everyone and their uncle has been saying something on the lines of Nobel-winning economist Paul Romer’s famous line: “A crisis is a terrible thing to waste”. And it increasingly appears that Pakistan is wasting this crisis. Sad, because “reforms” were perhaps the only good thing to have come out of the public suffering that hasn’t peaked yet.
The push for constructive “reforms” during coronavirus – as has been made in several other countries –works because it links the gravity and urgency of the ongoing public health crisis with the way the wheels of the economy and business have been operating for a long time. The idea is to use the moment of peril to turn the public, the civil servants and the businesses into partners in undertaking meaningful changes to how the economy works.
Depending on whom you ask, the list of reforms Pakistan needs is long and varied, but five broad areas stand out for interventions. These are undertaking tax machinery overhaul, addressing energy sector inefficiencies, fixing/selling loss-making public sector enterprises (PSEs), making it easier to do business, and deepening the public-private-partnership model for infrastructure development.
Readers would have noticed that most of the above reform areas are directed towards creating fiscal space, which can be a good thing for welfare spending for the masses as well as creating a credible fiscal policy framework for investors. In addition, this crisis’s emotive nature can mellow hardnosed stakeholders. Federal government, therefore, could make a reasonable case to the public, business, and bureaucracy that it needed to commence structural reforms so that it could spend more on the people during the immediate health crisis and create conditions for employment generation in the long-term.
There have been some publicly-announced measures over the last two months. For instance, in a significant step towards privatization of the belly-up Pakistan Steel Mills, full employee retrenchment has been sanctioned. Moreover, the freshly-constituted National Finance Commission is looking to address fiscal imbalances by asking provinces to share in the burden of, among other things, subsidies and PSE losses. In addition, oil-import “hedging” has been approved to benefit from low international oil prices.
Strikingly, such measures have been woefully few and far between. And they may not work when necessary legal, administrative and sectoral loopholes remain open. Furthermore, such measures seem random and have not been articulated as to how they will help the public sector provide better governance in these times and next. Also, critics would point out that issues related to tax policy and administration and ease of doing business have been beyond ripe for reforms, but left untouched.
So far, the government has looked resigned to impending mayhem, acting like a deer caught in the headlights. While there is still time, what complicates any reformist push during the remainder of the pandemic is the government’s loss of face over its crisis management and its refusal to unequivocally deploy scientific approaches to contain the virus. Left to their own devices to fend off a deadly contagion, the public (which is arguably not a monolithic entity) might agitate if it is asked to shoulder the pain of any future reforms sold in the name of coronavirus.
Besides, the partisanship and mixed messaging have further divided the public. Some opposition parties have already come out against the PSM layoffs and the expanded NFC agenda. This public loss of legitimacy may ensure that reforms, if at all they are packaged and pushed by a state in stupor, will wither on the vine. This once-in-a-lifetime crisis may have been an opportunity for the Pakistanis to evaluate their political and economic systems and demand transformative changes. Alas, they might not even get piecemeal reforms of some impact anytime soon.
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