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Although elections are right around the corner on February 8, leaving little time for discussion on manifestos, the three major political parties – PPP (Pakistan People’s Party), PML-N (Pakistan Muslim League-Nawaz), and PTI (Pakistan Tehreek-e-Insaf) – have only recently launched their election manifestos.

Moreover, the economic manifestos of all three parties have similar economic goals, most of which nonetheless qualify as important economic outcomes that need pursuing, like achieving increasingly inclusive, sustainable economic growth, enhancing revenues, investment, exports, and employment, along with increasing development, and welfare expenditure, while making the country more climate change resilient economy.

Two serious issues are at the core of the economic manifestos of these main political parties. Firstly, there is little clarity on the underlying economic philosophy, which will highlight how they view the causes of economic issues at hand, and chart out the policy route that political parties will take to deal with those issues.

For instance, take the important issue of inflation, whereby if these parties continue to look at the issue through the lens of neoliberal philosophy, as has been the case traditionally in the country, both by ‘Chicago Boys’-styled policymakers, and also by International Monetary Fund (IMF) programme philosophy, then they will continue to adopt over-board monetary, and fiscal austerity (or high interest rate, and goals like primary surplus) policies.

This is because they will view inflation as caused by excess aggregate demand, while there is a significant say of supply-side in determining inflation. Moreover, doing that would mean that there will be a lot of growth sacrifice, which, in turn will bring out a conflict in their policy goals of lowering both inflation, and enhancing growth, since high interest rate will contribute to cost-push channel of inflation, will also increase cost of doing business, which in turn will negatively impact the high growth, export and employment goals that these parties are setting; not to mention loan schemes for subsidized housing will become more difficult in the face of rising interest rates, along with low revenue and exports as a consequence will also hurt revenue and foreign exchange-earning prospects, in turn contributing to enhancing twin deficits that these parties are vying to otherwise bring down.

The choice of economic philosophy, whether neoliberal or social democratic for instance, will also have a telling impact of the type of growth model they wish to follow. For instance, all of the parties apparently are cognizant of the seriously lack of success of the ‘trickle down’ growth model and, in turn, favour ‘bottoms up’ approach through direct cash transfer programmes – BISP, ‘Ehsaas’, or a number of ‘cards’ for transferring cash – for investing directly into the lower income groups.

A neoliberal policy approach relegates the role of public sector to mainly act as a facilitator of private sector, which means concentration of market power over time, given the underlying assumption of less regulation as has been the case in the country over the years, resulting in predominance of profit signals determining the investment decisions of the private sector, while welfare concerns are pushed as much as possible.

Hence, public-private partnerships, and the poor making the best use of cash transfers, use of house title as collateral for loans for business by the same poor household, would require an active, welfare-oriented role of the government, which requires a social democratic role of government, both as an active player in market, and in ensuring that public interest is safeguarded in the contractual agreements while partnering with the private sector; not to mention running the state-owned enterprises as far away as possible from privatization as done by China or Scandinavian countries, to allow their working for the best possible interest of society at large by reining in profits, reducing negative externalities like pollution, and ensuring re-investment of profits into the real economy, and in raising the income of the employees, and not primarily as distributing most profits among shareholders, CEO pays, and in share buybacks.

The second important thing missing in the manifestos mostly is emphasizing the role of ‘vehicles’ through which goals will be achieved. These are the rules of the game, or economic institutions, or basically the ministries responsible for different sectors of the economy, and the ‘players of the game’, which are the underlying organizations to these institutions, or departments under these ministries, along with the markets where all economic agents, public and private come for exchange purposes.

As a corollary, therefore, the government, and the civil service are also an important vehicle. There is little indication of how these vehicles will be reformed for most efficient use of skills of economic agents – including vocational trainings provided to poor people for enhancing their income prospects on more sustainable trajectory – and ‘finance’ whether through public and private expenditure through loans, or as cash transfers to the lower-income groups. Hence, for example, cash transfer programmes, or subsidized loans, or public- and private investment in general, all will require an efficient functioning of these vehicles.

Here, once again, the choice of a particular economic philosophy – neoliberal or social democratic –will determine the extent of role of public sector in these vehicles, which are basically institutions, organizations, and markets. Moreover, there is little discussion of how the public service will be made efficient.

Weak vehicles, as has been the case traditionally, would mean that any set of deliverables in terms of promises and extension of social welfare benefits will most likely produce lukewarm outcomes in terms of for instance, lowering poverty, inequality, and in moving towards a sustainable, inclusive, green, resilient economies.

It needs to be indicated that the extent of exploring policy options to unlock climate compensation related inflows – for instance, not referring to the role of ‘Bridgetown Initiative’ policies, including pushing the case with IMF for climate change related special drawing rights (SDRs) related annual allocations for highly climate countries, to which Pakistan also belongs – by these manifestos also comes out as a weak point in coming with meaningfully concrete plans to invest towards climate change resilient economies.

Moreover, no connection has been highlighted between climate change and the ‘Pandemicene’ phenomenon, which calls for a lot more public health sector spending for preparedness – including foremost perhaps in establishing much greater capability of producing vaccines for likely pandemics, given the vaccine apartheid experience during the Covid pandemic – for a likely pandemic situation once again.

Last but not the least, there is no call by any of these major parties to approach reform of Bretton Woods institutions, like IMF, to bring them into the twenty-first century, including reforms such as quota reforms, and in moving their policy thinking away from neoliberal, austerity, and pro-cyclical policies, which even the research department of IMF favours moving towards counter-cyclical policies. There is also no mention of pushing IMF to cancel their otherwise ‘junk fee’ that they charge the countries in the shape of ‘surcharge fee’.

Copyright Business Recorder, 2024

Dr Omer Javed

The writer holds a PhD in Economics degree from the University of Barcelona, and has previously worked at the International Monetary Fund. His contact on ‘X’ (formerly ‘Twitter’) is @omerjaved7


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