There’s something in the argument, even if it’s been disproved by most analysts and thinkers, that a weak economy is democracy’s soft underbelly and will, with time, prove to be its undoing; especially in countries like Pakistan. There’s no better news for a main opposition party, for instance, than economic trouble - people losing jobs, inflation out of control, preferably a recession.
Then it can attack the government in public, congratulate and high-five with each other in private, and hope the brownie points will suffice to tilt the scale in its favour when people go out to choose the right representative government for them.
Compare that with a single-party setup where it’s everybody’s job to keep the economy in line, even if it’s with the or-else threat, and nobody’s even secretly wishing that the currency would collapse or the market would tank. Now give a thought to the other side.
A prime minister sitting on top of an out-of-control current account deficit, rising unemployment, a historic collapse of the rupee, and inflation that’s driving people crazy, and still saying everything’s fine like everybody believes it. There must be a reason that a country with the single party model has to give life support to a country that has chosen parliamentary democracy.
Asad Umar evoked the ‘charter of economy’ once again in the National Assembly during the stand-off with Shehbaz Sharif over the fate of IMF’s prior conditions. But that was only because the pot had to call the kettle blacker to keep the tradition of the House alive.
He knows, just like everybody in the country knows, what Shaukat Tarin really meant when he said that the mini-budget would make things more expensive only for the very rich. He also knows that what will come from the mini-budget will be a hard sell at the next election. So, what better strategy than reminding people how much worse things were with others ran the show? If coincidences did exist then the finance minister’s revelation, this late in the electoral cycle, that Ishaq Dar’s dubious rupee policy (Darnomics!) cost the exchequer about $60 billion — that’s more than half the external debt — could be dismissed as one.
Meanwhile, the bailout programme still hangs in the balance. Will the opposition really oppose, and then succeed in opposing, IMF’s prior conditions? If so, what then? The people have just gulped the inevitability of more taxes and less subsidies so the government can get another billion dollars that will make no difference to their lives whatsoever.
Now, if the conditions are not met and the Fund really looks the other way even after all that has been done, how much higher inflation should they prepare for? Nothing kills the market like uncertainty; and here’s our system, adding to it.
It would’ve been far better for a central authority to hammer out the deal and get it over with. That way the market could at least look toward adjusting to a new reality. So far, the latest news is that IMF has agreed to extend its executive review of the Extended Fund Facility (EFF) till end-Jan, which basically means it has agreed to give us a few more days to get the mini-budget and SBP (State Bank of Pakistan) amendment bill through parliament. But it’s also hinted at re-negotiating the deal, which has clearly spooked the finance minister. There’s not much clarity there either.
If said bills are not passed then the whole thing would unravel and that would pretty much be the end of it; though for most people it would only mean more chaos and higher prices. But if and when they are passed, Shaukat Tarin’s job will become a whole lot more difficult.
He will have to do things to the economy that the party can sell in the campaign. Yet such is the state of the economy that the best he can do is put lipstick on the pig, so to speak. And it’s how he pastes that lipstick, and how effectively PTI can turn it into an advertisement campaign that mobilises people, that will make all the difference on election day.
Things would’ve been easier for the government if it had something to show that stood out. But since it doesn’t, and it will have to do whatever it takes to revive the IMF programme which will soon make people’s lives much harder, it has its work cut out for it. Often, in this way, politics becomes the art not of the possible but of the impossible.
Copyright Business Recorder, 2022