Picking up the pieces
The Karachi Stock Exchange hit an all-time high following Nawaz Sharif’s strong victory in landmark elections. This raised hopes that the new government’s pro-business agenda could spark an economic revival. The benchmark index of top 100 shares rose 1.68 percent to 20,250.42 points on May 14, surpassing the 20,000 mark for the first time. The ratings agency Standard and Poor’s said the election results set the stage for “longer-term stability” of its B- sovereign credit rating on Pakistan. Investors hoped there would be an economic revival under Sharif, whose pro-business policies earned him a good reputation among traders and industrialists during his two previous tenures in the 1990s. The apex body of trade and industry, the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) also hoped the incoming government would commence efforts for revival of the economy without losing any time. The FPCCI said that after getting a full mandate from the masses, it was hoped Nawaz Sharif would overcome the energy crisis by taking bold decisions in the larger interest of Pakistan’s economic sovereignty. It was said the nation could now look towards the new government’s wholehearted focus on national issues such as the economy, corruption and militancy.
The government of Nawaz Sharif faces such challenges as repayment of $3.9 billion in FY 2013-14, $1.35 billion in FY 2014-15 and $60 million in FY 2015-16. The new government could lessen pressure on the rupee-dollar parity and foreign exchange reserves by utilizing overseas Pakistanis remittances in a judicious manner and attracting foreign investment from overseas Pakistanis and international business houses. The fact is that Pakistan’s economy needs urgent attention, which means reforms must be announced as soon as possible. It is also essential for the new government to announce an economic team that has reasonable domestic and international credibility on the basis of demonstrated competence. Very soon Pakistan will be going to the IMF and the government would need to take steps to stop hemorrhaging in the public sector enterprises and state institutions in order to raise revenue and restrict spending.
The Pakistan economy is no doubt intertwined with the security environment, which means a credible foreign policy also needs to be carved out. In this context, Pakistan needs a clear National Security Strategy which will provide it with the much-needed strategic direction. It is also important that the civil-military relationship be put on an even keel so that the country has the advantage of exploiting the structural and organizational strength of the military in all national policies including counter-terrorism. It is unfortunate that the outgoing government never succeeded in gaining credibility because of its all round failure. It therefore falls upon the new government of Mr. Nawaz Sharif to pick up the pieces and put Pakistan on the path to economic recovery. This is a challenge that the new Prime Minister and his team must take up in right earnest because it is primarily their performance on this count, besides many others, that will determine the future of Pakistan.