Revamping Pakistan’s domestic economic base | Pakistan Today

Revamping Pakistan’s domestic economic base

It is and has never been about external security challenges

A few days ago, Moody’s, an American business and financial services corporation downgraded Pakistan’s economic rating from ‘stable’ to ‘negative’. A couple of years ago, Moody’s had termed Pakistan’s ratings stable mainly owing to the return of businesses due to an improved security situation and the likely impact of the China Pakistan Economic Corridor (CPEC) which has attracted a number of big investors to the county.

Unfortunately, as it appears, the country’s much cited economic revival doesn’t appear to be working out very well. Pakistan has borrowed more money from various Western financial institutions and China in the last few years than any time in the past. There doesn’t appear to be a long term state level policy to revive the country’s domestic economic base which not only threatens to undermine Pakistan’s internal and external sovereignty but also creates potential risks that can create political, security and social disarray inside the country.

If the last few months of Pakistan’s economic activity are any indication, the outgoing government was not doing anything besides borrowing heavily at high interest rates and manipulating the currency to show stability and firmness of Pakistan’s economic growth. The Pakistan Muslim League Nawaz’s (PML-N) primary focus in this regard was to demonstrate a cosmetic growth which is based on the extensive borrowing that has only added financial burden on Pakistan’s balance of payment’s dilemma which continues to haunt the country’s foreign reserves. With the value of the dollar going up against the Pakistani rupee, the country has only one option which is to ask for more money to payout for ever increasing imports. According to latest reports, Pakistan’s overall imports have increased exponentially while the country’s exports continue to decline even though the overall security situation has improved to a great extent.

During the 1970s, 1980s and 1990s, there is not much data to make a case that Pakistan could not do well financially domestically just because the country was a victim of terrorism and militancy internally

A popular opinion amongst the ruling elite is that the bad security situation of the country and energy crisis have are the main reason for Pakistan’s continuous economic decline. This is a false assertion and an argument which is nothing more than a political statement. To begin with, Pakistan’s security woes mainly began after the 9/11 incidents in the United States of America when a number of extremist groups started targeting the country. Pakistan’s economy, on the other hand, has been the victim of decades of terrible monetary policies which have shown absolute apathy toward the country’s domestic economic potential which should have been harnessed rather than depreciated. During the 1970s, 1980s and 1990s, there is not much data to make a case that Pakistan could not do well financially domestically just because the country was a victim of terrorism and militancy internally. Rather, what we see during all these years is a vicious circle of power struggle among the country’s political elites who have never truly focused on a national economic policy that harnesses the true potential of Pakistan’s domestic economic base.

Consider some factors for clarification. During most of the 1990s, Transparency International ranked Pakistan as one of the most corrupt countries in the world. In 2017, the organization ranked Pakistan 117th out of a total of 180 nations globally in terms of perceived public sector corruption. Pakistan has not been able to address its electricity crisis while the country doesn’t have a policy to construct new dams or storage facilities to address energy crisis and adequately feed its agriculture sector which remains under acute stress. While Pakistan is a so called agrarian economy, the country is running out of water fast and according to latest research reports, the country may not have water by 2025. The rapid urbanization of Pakistan is not something that should be called an encouraging phenomenon; rather it should be seen from a lens that sees it as a challenge: Pakistan’s rural economies which were mostly dependent on agriculture sector have vanished due to energy and water crisis.

The growing trend of ‘moving to big cities’ to find work has not helped as it has only added burden on urban economies of a handful of major cities of Pakistan such as Lahore, Karachi, Islamabad, Faisalabad and others. Compounding this problem is a dying industrial base of major Pakistani cities which have faced competition globally when it comes to becoming competitive with respect to industrial giants from China and elsewhere. Pakistan’s population continues to rise exponentially: according to a recent report by the UNDP, Pakistan currently has the largest young population in its history. Moreover, Pakistan is among the countries with the highest number of young population in the world. Unfortunately, Pakistan’s youth bulge is a ticking time bomb as it remains poorly educated, unskilled, frustrated due to the unavailability of jobs (Pakistan needs more than 2 million jobs every year to accommodate university graduates) and lost in a struggle of identity crisis due to various internal ideological and social frictions.

These issues are just the tip of the iceberg. However, this all points towards growing internal challenges which are only going to explode in the coming years if there is not a comprehensive policy to radically change the way Pakistan is being run. Pakistan should not feel threatened from external security challenges as the country has one of the finest security apparatus. Rather, the country should be scared of the rapidly growing internal challenges which by and large circle around its economic woes. If Pakistan is to survive and thrive, the country cannot afford cosmetic solutions to problems which pose an alarming challenge to the country’s survival.

Umair Jamal

Umair Jamal is a graduate of the School of Government and International Affairs, Durham University. He is a research fellow with the Centre for Governance and Policy. He regularly writes for various media outlets. He can be contacted on Twitter: @UJAmaLs.