Sharif ’s take on Pakistan crisis
PRIME MINISTER SAYS FISCAL PRUDENCE AND INVESTING IN YOUTH AND WOMEN ARE KEY
PAKISTAN was once widely thought to become the next “Asian tiger”, but has found itself mired in financial crisis, prime minister Shehbaz Sharif said, citing three key “flaws” that have prevented its economic take-off, stunted its growth and led to repeated boom-bust cycles.
Sharif wrote an essay in The Economist magazine as Pakistan turned 75 last Sunday (14) and said the country in its adolescence, in the 1960s, brimmed “with hope and promise as it had a date with destiny”.
However, in 2022, as the country seeks funds from the International Monetary Fund (IMF), Sharif wrote, “This one [latest economic crisis] is born out of the most challenging global policy environment of our lifetime, characterised by a commodity supercycle, historic monetary tightening at America’s Federal Reserve and a conflict in Europe that is tearing apart the post-war global order.
“But it also stems from homegrown weaknesses: weaknesses that have been left unaddressed for the better part of five decades; weaknesses that have forced us to approach the International Monetary Fund multiple times during that time. This is not how successful nations are built.”
Sharif then cited three critical structural flaws.
“First, our political environment has become increasingly polarised. Instead of debating how to run Pakistan better and rid the country of poverty, political parties have been at each other’s throats,” he wrote.
“Second, we have not invested enough in the nuts and bolts of development: education, health and infrastructure. This is in part due to an abysmally low tax take, but it also reflects our priorities in public spending, some of which can be attributed to the complicated neighbourhood we live in, including a long-standing adversarial relationship with India, Russian and then the American invasion of Afghanistan and the influx of millions of refugees into Pakistan.
“Third, we have turned inwards in a way that has prevented us from reaping the benefits of globalisation through the free exchange of people, goods, capital and ideas. Our ability to make and keep friends on the international stage has significantly weakened over time,” he said.
Sharif lamented that Pakistan hardly makes anything to cater to the demands of the world as domestic companies remain comfortable operating within the borders, the report said. “Pakistan today is one of the most consumption-oriented economies in the world, with consumption accounting for more than 90 per cent of our GDP (gross domestic product). By contrast, we only invest 15 per cent of our output and export just 10 per cent. Annual inflows of foreign direct investment are less than 1 per cent of the GDP,” he wrote. “These sorry statistics are a reflection of the flaws in our economic model. No successful country has ever grown this way,” he said.
Sharif urged introspection as the nation turned 75. He said the fifth-largest country in the world, where two of every three people are below the age of 30 and full of aspiration, finds itself stuck with an income level of just $1,798 (£1,488). Every third person lives on less than $3.20 a day and fewer than a quarter of Pakistan’s women work outside the home while more than a third of people can neither read nor write, he said.
“Our immediate priority is to safely navigate through our current economic crisis. We are not alone in this. The whole world faces a difficult year. But we have the protection of an IMF programme to see us through. While some measures will create hardship and require sacrifice, we are committed to implementing the programme. This is our path to safety,” Sharif wrote.
“This challenging moment also offers us an opportunity. If we can get a core set of things right, there is no reason why we cannot turn our fortunes around. What will it take? A consensus on the direction Pakistan must take. There will always be political differences in a democracy like ours.
“But there must be agreements on a few principles: managing our finances prudently, investing in our people, encouraging merit and innovation, and promoting regional peace. This is within our grasp,” he said.
It was important to modernise Pakistan’s social contract and people must pay their fair share of taxes in return for vital public services, the prime minister added.
“We must do better for our youth and our women and enable them to fulfil their aspirations and become drivers of our economic growth. We must have a clearer sense of what values our nation must espouse, including tolerance, hard work, meritocracy and social justice, and the place we want Pakistan to occupy globally as a responsible and modern nation,” he wrote.
Pakistan is facing growing economic challenges, with high inflation, sliding forex reserves, a widening current account deficit and a depreciating currency.