By: Afshan Subohi
The going is expected to get tougher for economic managers as political shocks become a norm, armed conflicts intensify in volatile Middle East and hopes of global economic recovery anytime soon wanes, world leaders in the grand congregation at the annual meetings of the World Bank and IMF warned last week.
Global economic prospects appear uncertain and the balance of risk is at a downslide, finance ministers, bankers, economists, private sector and civil society representatives noted at the meetings last week in Washington.
Their perspective is rooted in three concerns: (i) rising fragility of growth, financial instability, indebtedness and exclusive prosperity; (ii) shocking political developments (Brexit, candidacy of Donald Trump) delaying policy adjustments; (iii) the potential damage not limited to missed-out economic opportunities, but feeding into public resentment towards free trade and autonomous regulators.
Pakistan appears too consumed by internal politics and border skirmishes with its neighbours to partake in contemporary global debates on worldwide concerns
Pakistan appears too consumed by internal politics and border skirmishes with its neighbours to take part in cotemporary global debates on wordwide concerns.
Flying high on Chinese financial doses for CPEC infrastructure projects, Pakistan’s economic team is not just confident, but in a self-congratulatory mode. The brief for Pakistan’s delegation (that included State Bank Governor Ashraf Mahmood Wathra, secretary, economic affairs division Tariq Bajwa and the longest serving federal finance secretary, Waqar Masood), insiders told Dawn, was to highlight the ‘stellar performance’ of the of Nawaz Sharif government. It appears the delegation had an exclusive agenda.
Several attempts to reach official participants proved futile. At this point the relevant ministries and the SBP declined to offer comments to Dawn.
R Sami Ullah, deputy chief economist Planning Commission, said over the phone from Islamabad, “No one from the Planning Commission went to Washington for annual meetings as we have nothing to do with it. The ministry of finance and the economic affairs division, between themselves, deal with donors.”
A federal minister promised the government input but just before the deadline, excused himself. He said the level of participation was probably relatively lower because of the absence of Finance Minister Ishaq Dar. Dar decided not to proceed to Washington at the last minute because of more important engagements at home.
“Despite negative press and aggressive propaganda by unfriendly nations Pakistan has been recognised for its economic turnaround. The growth rate is improving slowly but consistently, inflation is within control and the foreign exchange reserve position relatively stable.
“It is not just China, but other donors are also showing a greater interest in the country. Asian Infrastructure Investment Bank chose Pakistan for its first credit, and the ADB and the World Bank have also conveyed their willingness to increase their stakes. What does this signify? Pakistan is back on a high growth trajectory”, a senior official of the relevant department argued.
“The opposition is unnerved primarily by the economic gains. They know by the end of next year several infrastructure projects will come online that would add to the political capital of the PML-N, and would pay off in the next general elections”, he further commented.
Detractors were not convinced. They drew out their own set of statistics to prove misplaced priorities and economic policy failures of the ruling party.
“With remittances inflow now losing steam, and exports sliding, the external sector outlook of Pakistan appears grim. The depressed investment data, despite low interest rates, speaks for the level of confidence of businesses. The persistently rising debt threatens the long term sustainability of the economy”, a businessman from Punjab commented.
“Unfortunately the government appears too content with itself to care to listen to anyone. The fact that Pakistan’s economy is doing better than before, they believe, has given them a licence to act unilaterally”, he added.
“Friction in competing interests and disagreements over possible policy options among power yielders helps, and does not necessarily hurt the cause of development in a country. However, if the confrontation process degenerates to produce more heat without steam to energise productive agents it backfires, leading to stagnation and eventual decline”, commented an analyst.
“In a sense the 2016 annual meetings were remarkable as instead of masking facts, to justify a position already taken, there was a general realisation that the global economic crisis is deep rooted and can’t be wished away.
“To keep issues manageable extraordinary efforts are required to review strategies and rethink options. Old solutions can’t fix the new set of problems”, a banker, who found the Washington meetings energising intellectually, remarked.
Published in Dawn, Business & Finance weekly, October 17th, 2016