Inking an 'economic charter'

The present government has talked about building consensus on "charter of economy" a number of times. Addressing the business community on 10th February, 2017, Special Assistant to Prime Minister on Revenue, Haroon Akhtar again asked the opposition parties to sign a "national economic charter" with the government for stability in the economic policies to achieve long-term growth. This was necessary for continuity in economic policies, which are usually amended or revised with the change of political power. "The government wants no politics on growth," he said. It was also reiterated that, with the efforts of the PML (N) government, the economy is moving in the right direction and witnessing macroeconomic stability with lower interest and inflation rates, higher foreign exchange reserves and increasing foreign investment. During the last three years, Pakistan had become an emerging economy and by 2050, Pakistan will be ranked 16th largest economy of the world with current momentum of growth. All the international financial institutions and rating agencies were confirming these improvements and predicting a "stable outlook" for the economy. We are expecting a GDP growth of 5 percent and our target is 7 percent. In order to facilitate industries, development of infrastructure and availability of power and gas was government's top priority. Load-shedding will end in the mid of 2018, before the next general elections. Presently, Pakistan's tax-to-GDP ratio stands at 12 percent and the government wants to take it to 20 percent by broadening the tax base instead of higher tax rates. Pakistan was also to become a member of an international organisation that will enable banks of over 200 countries to share the information by 2018. The government had recently announced a Rs 180 billion relief package for exports while incentives for agriculture sector were announced earlier.
On the face of it, Haroon Akhtar seems to have made a good case about inking an "economic charter" with the opposition parties to ensure continuity in policies and avoid chances of interruption in the course of economic development. Citing a number of economic gains, he has underlined the need and advised the opposition parties to forge an understanding and agree on the present government's economic policies so that Pakistan could move up the scale in the ranking of world economies. However, while aspiring to make the task of his government smoother and easier, he has lost sight of the fact that it is the range of diverse economic policies through which political parties distinguish themselves and they seek the votes on that basis. If they agree on a single economic charter or agenda, then there will be no major reason for them to canvass against each other. For instance, while the present PML (N) government is concentrating on mortar and bricks projects like highways and fancy railways in certain urban centres, some opposition parties may be planning to bring social sector under the spotlight with a view to keeping the debt servicing liability of the country within reasonable limits. Moreover, Haroon Akhtar seems to be advising the opposition parties to fully agree to the present economic policies initiated by the PML (N) government. The question, however, is whether he has any plausible explanation in relation to the export slide, widening C/A deficit, uncalled-for pressure on Pak rupee, lower collection of FBR revenues and rising public debt of the country. Haroon Akhtar has also talked about taking the tax-to-GDP ratio to 20 percent without thinking that it is a Herculean task. He also says that the government is broadening the tax base while the fact is that the government has almost failed in this effort and it is, in fact, tightening the tax noose around present filers' necks. Export package of Rs 180 billion and the incentives for agriculture sector are yet to show some results. Proper stabilisation and consolidation of economy has yet to take place and we don't know how the government is going to persuade the opposition parties to agree to its economic agenda in such circumstances. Such an understanding is all the more difficult when the main political parties of the country are already on each other's throat due to some other reasons. Also, it is not clear who is going to monitor the agreement on the "economic charter", if and when it is reached. The apex court could intervene and decide on constitutional matters but may not like to interfere in such arrangements. Keeping all these factors in view, we believe that the idea again floated by Haroon Akhtar may appear to be good on paper but is hardly implementable, at least in the present situation.