If Google’s memory serves correctly, finance minister Ishaq Dar has been calling for a Charter of Economy since at least December 2015. Google’s memory, however, fails when one searches for his party’s version of the charter. Unless of course, you were to consider the election manifesto of 2018 as the charter, which pays lip service to everything under the sun from agriculture, IT, entrepreneurship, youth, R&D, and water management.
Since the idea of a charter was floated some 7 years ago, it has been both hailed as the ‘need of the hour’; and, belittled as ‘nonsense’ since political parties opposed to each other never can (and as some have argued, never should) agree on policies. In fact, many insist that if political parties were to ever reach a permanent consensus on ways to deliver economic growth, it would officially denigrate politics to popularity cults, and reduce electioneering to opposition on ethnic and sectarian grounds. As if, the decibel of political divisiveness in the country wasn’t already high enough.
But a consensus on a minimum common agenda on issues has been shown to deliver in two key areas in recent times. First, the Charter of Democracy (2006) helped lay the foundations for the 18th constitutional amendment that fundamentally reshaped the structure of the federation. Two, the narrative built under National Action Plan (2014) helped take the fight against TTP in the aftermath of the APS Peshawar tragedy. It may be true that political parties should never have to agree on the finer details of any policy, whether economic or social. However, it could be argued that a minimum common agenda can at least help create consensus on the identification of problems and issues. And as far as Pakistan’s structural issues are concerned, few would disagree that the economy tops the list at the moment.
But as the policy guru of a political party that was the first – and most vocal – advocate of the need for a charter, Dar’s version of the charter is conspicuous by its absence. Since he first flagged the idea in 2015, at least seven documents on an economic framework for sustainable growth have been presented by independent policy think tanks and non-governmental organizations, which refer to a minimum common agenda. In 2017, BR Research presented its “Fourteen Points of Charter of Economy”. After PTI came to power, the World Bank (in collaboration with LUMS) presented the Pakistan@100 report in March 2019, which outlined how Pakistan can boost growth and productivity to achieve sustainable economic development. During Covid-19, Pakistan Business Council called for a consensus on the resolution of Pakistan’s economic challenges and presented its own charter in November 2020. In April 2021, the Pakistan Institute of Development Economics presented the ’Reform Agenda for Accelerated and Sustained Growth“. Economist Hafiz Pasha presented his version of the Charter of the Economy in September 2021.
Earlier this year, PIDE’s VC Nadeem ul Haque wrote a short paper on the Charter in July 2022. Later in October, World Bank published Pakistan’s Country Economic Memorandum, a roadmap to sustainable growth. Most recently, the Pakistan Society of Development Economists designed the theme of its Annual General Meeting, held in November, on the Charter. The only ones calling for a charter without outlining what’s in it are Dar and PML-N - and now by extension – the PDM coalition government at the center.
Recent statements by PML-N spokespersons imply that the charter is not in place yet because PTI leadership is opposed to the idea. Even on the surface, that’s no excuse for the absence of a draft. Keen observers would recall that when the Charter of Democracy was first signed between PPP and PML-N in 2006, the largest party in the parliament (and in power) at the time was PML-Q, which had mocked the very idea of a charter. In fact, if there was ever a good time to present a charter on economic issues, it is today. Why?
While Pakistan has witnessed many alliances between political parties when in opposition – from PNA in the 1970s, to MRD in the 1980s and ARD in the 2000s – the present-day PDM government is possibly the broadest based coalition of political parties together in power. PDM has a representation of Baloch, Pakhtun, and Mohajir nationalists such as BNP, ANP, and MQM; religious political parties such as JUI-F; secular-leaning PPP; and, the center-right PML-N. Even today, these parties represent at least half of the legislature, and by extension, the will of at least half of the voting population. Surely, a consensus over the economic reform agenda between the coalition partners should be sufficient to kick starts the process.
Two, if the charter addresses major challenges faced by the economy today, it would be welcomed by business interests such as the PBC and FPCCI. This would in turn help weaken PTI’s opposition to the idea, and, may help force them to the negotiating table. In fact, if the ruling coalition partners could reach a consensus, PML-N could insist to the wider audience – including IMF and bilateral lenders – that it is unable to instill necessary reforms solely due to PTI’s opposition.
If PTI rejects any consensus which appeals to common sense just for the heck of opposition, it would not only risk losing the support of independent policy thinkers but may also lose swing voters who care about the issues. In fact, PTI risks losing potential donors from influential commercial interests if it engages in baseless opposition to reform at a time when the economy faces potential default. If PML-N wins big in a future general election and forms a government without support from smaller parties, the charter would also help dampen opposition on key issues such as privatization, which are otherwise opposed by PPP and MQM when not in power (such as privatization of Steel Mills, for example).
Which raises the question: where is PML-N’s charter, and why has it not presented one even after seven years? Three possibilities come to mind, and none has to do with PTI’s opposition. First: PML-N fears that it might fail to bring consensus among its own coalition partners (and possibly, establishment) on key issues such as reform of the energy sector; deregulation of markets; public sector spending caps; documentation and taxation of real estate and traders class, among others. And a failure to achieve consensus on key policy areas may bring down the government altogether.
Two, the party which reverses tax on retailers based on one tweet has never been sincere in the idea of economic reform. Instead, the idea of a charter has been bandied about to create a pretense of its commitment to economic growth. This helps the party build a progressive image in front of voters most concerned about the economy, especially when other parties run election campaigns over identity politics, religious issues, or even accountability.
If the second explanation sounds awful, consider the third: PML-N has no idea what a charter on economic reform should look like. A party that has placed its full faith in the economic brinkmanship of a man who believes he can bring the exchange rate down with his sheer willpower would probably fail at the problem identification stage, let alone propose any solutions. Should Pakistan, for example, export its manpower to grow remittances? Or, does the resulting brain drain pose an existential threat to our national productivity? Will lower tariffs on import help boost exports? Or should Pakistan commit itself to import substitution by raising tariffs? Forget about sugar industry reform, it took PDM full 10 months to decide whether exporting small quantities of it was a brilliant idea, or a terrible one.
Whether the charter of the economy is a good idea or a silly one is irrelevant. To borrow from Dr. Ilhan Niaz, “Pakistan’s elite is intellectually bankrupt”, and has little clue about how to begin structural reform. Increasingly, it appears that just like National Action Plan, it will take a national tragedy to force them into action – even if that means plagiarizing from the various versions long present in the market of ideas.