Fast-unfolding climate change crisis, which has strong imprint on the recent floods has once again – just like in 2022 – thrown light on the lack of resilient economy.
Moreover, what is termed ‘economic recovery’, as has been voiced for sometime now by highlighting a set of macroeconomic indicators, reportedly by government, and the country’s central bank, has proved nothing more than just short-term improvement in certain macroeconomic indicators like with regard to inflation, and current account.
This is because the fundamental policy choices that have been involved — Neoliberalism, and over-board austerity — have a track record for many years now overall globally, of delivering a flaky, and frothy economic recovery, with the medium- to long-term costs of weakening of resilience, and welfare aspects in particular, including undue sacrifice of economic growth for short-term macroeconomic stability and worsening situation of inequality and poverty, and, in turn, political voice that this invariably causes.
Moreover, a lesson in the wake of the Covid-19 pandemic was that economic policy needed to work in an inter-disciplinary way since the nature of existential threats crosscut, and overlapped important sectors like environment, and epidemiology, in addition to economy, all of which needed to work together for achieving overall economic resilience. That lesson sadly never left the domain of words, and a serious lack of action in this regard has continued to cost dearly.
Not just coming together, a much-needed revisionist approach to following neoliberal, and austerity policies had to be adopted, for unlocking the benefits of this inter-disciplinary approach.
The government remaining limited to only reactionary response to market failure as only a facilitator to private sector and only seeing primarily the role of austerity policy as a pathway to economic recovery has continued to serve as a recipe for disaster, with the result that the role of public service, for instance, and before that of public representatives, and through them in terms of legislation at the ministerial level remaining overly-limited and cautious, and on the diminishing path in terms of built-up of capacity.
Moreover, sub-optimal performance of public representatives and appointed public servants, working in the spirit of neoliberal philosophy – advanced both through reform programmes of multilateral development partners like International Monetary Fund (IMF), and World Bank, and by ‘Chicago boys’-styled local policymakers – has not allowed putting economic recovery on strong footings by both seeing a more balanced role of aggregate demand- and supply-side policy on one hand and adopting an inter-disciplinary approach for overall needed resilience gains on the other.
Also, this has also led to government and private sector not coming together in a much-more needed symbiotic relationship in an overall environment of mission-oriented governance and incentive structures provided by ministries/institutions for resilient functioning of organizations, and markets.
In her renowned (2018) published book ‘The value of everything: making and taking in the global economy’, noted economist Mariana Mazzucato indicated in this regard: ‘A new discourse on value, then, should not simply reverse the preference for the private sector over the public. What is required is a new and deeper understanding of public value… This value is not created exclusively inside or outside a private-sector market, but rather by a whole society; it is also a goal which can be used to shape markets. …The idea of public value is broader than the currently popular term ‘public good’.’
The current economic policy framework in the country, and through the multilateral institutions, overall has continued to limit the role of government and in terms of ‘public value’, without which it is not possible to create a resilient, and inclusive society. This has, in turn, diminished the capacity of economic institutions to legislate effectively to improve the investment environment to the extent that even the pledged amount by international development partners for the catastrophic floods in 2022 could not receive any significant number of viable projects from government, and even by private sector, as a result of a lack of capacity of public sector institutions, and in general, short-term profit-oriented skill sets of the private sector.
Years of practice of neoliberal, and over-austerity policy in developed- and more so in developing countries in general, including Pakistan, have diminished already traditionally highly sub-optimal capacities, and to expect that these countries can pick up pace and outdo the fast pace at which climate change crisis is unfolding, especially when the same policies have continued, is naïve at best.
Not only will multilateral institutions need to reverse underlying philosophy of their advice away from Neoliberalism, they will also have to significantly support developing countries in coming up with projects that can receive climate finance, and fast.
This then, also raises the concern that the poor state of climate financing will need to be addressed at the earliest possible.
A September 4, Bloomberg published article ‘Missing billions in Pakistan expose grim reality of global climate finance aid’ pointed out in this regard: ‘Less than half of the roughly $11 billion pledged by the European Union, China, Asian Development Bank and others in the wake of the 2022 floods has reached Pakistan, said the UN Office for the Coordination of Humanitarian Affairs, citing government data.
Projects have been or are being identified for about three quarters of the total pledged amount, according to the Ministry of Economic Affairs. …What has been disbursed of that pledge — about $4.5 billion as of June — has gone to rebuilding housing, transportation, drainage, and toward flood risk management. …Globally, the UN estimates the funding gap for climate adaptation is at least $187 billion a year. That’s in part because developed countries have been slow or reluctant to follow through on funding commitments announced on the international stage.’
Copyright Business Recorder, 2025
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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