Reporting on the Economic Survey of Pakistan
The Economic Survey of Pakistan is available for download on the Ministry of Finance website. The executive summary of the Economic Survey is also available to read online via the Associated Press of Pakistan.
Recently there have been a few opinion articles on what the Economic Survey of Pakistan says about the state of the Pakistani economy. These articles have been surprising in their extremely negative interpretation of certain paragraphs in the Economic Survey’s executive summary. According to Cyril Almeida at Dawn, the economic situation as presented in the Economic Survey is so grim that these last few years will be known by historians as “the lost years” of Pakistan’s economy. He even alleges that the authors of the Economic Survey know this fact, despite the government’s positive spin. He quotes from the economic survey executive summary:
“… without a resolution of Pakistan’s perennial structural challenges, such as raising the level of domestic resource mobilisation or promoting higher productivity in the economy, growth and investment will continue to be constrained, and the growth prospects volatile.”
Similarly, Muhammad Arifeen, writing in the Express Tribune titles his article “A dismal outlook: the economic survey” and goes on to say that:
KARACHI: The government admits in a survey that that the little economic recovery that the country managed is fragile.
Readers who have not read this document will, from these reports, get a certain impression of the Economic Survey that is not borne out by a reading of the actual document in question. Let’s read what the summary says about Pakistan’s economy under the header “Outlook for the economy”:
The medium term prospects for the economy are promising, provided the current path of reform is not abandoned. Pakistan has achieved fairly impressive early success in its efforts to stabilize the economy from a parlous state of affairs in the aftermath of the macroeconomic crisis of 2008. Protecting the Economic Survey 2009-10 recovery is of paramount importance, and the government needs to keep a restrictive stance on public spending.
Greater realism about the prospects and accurate forecasts about resources and available funds for the development plans at each level of government is needed.
A number of interlinked actions are needed in the coming year:
Checking inflation-this involves limiting borrowing by the government and the public sector. Bringing people to the centre stage, by appropriately designed employment and training programs to protect those in strife-affected areas, and new entrants to the labour force. But there are major risks to the growth and stabilization prospects if there is Non-implementation of the reform of the GST, leading to a VAT, or other significant tax broadening measures; This might affect the phased nature of fiscal devolution envisaged under the Eighteenth Constitutional amendment (to be effective from 2011-12), in the context of the frontloaded transfers to the provinces under the Seventh NFC Award (effective from July 1, 2010);Larger-than-budgeted security related expenditures;
Inadequate targeting of subsidies,
Failing to reform public sector enterprises, including the power sector, with no resolution of the energy circular debt issue;
Continued overhang of commodity financing debt stock, if unchecked, threatens to constrict access to bank credit by the private sector, while simultaneously increasing the interest rates in the economy;
A deterioration of the internal security situation. The tipping of the world economy into a severe recession in the wake of the Euro-zone debt crisis, could hurt Pakistan’s exports as well as remittances on the one hand, but could reduce international prices of key commodities such as oil, on the other. With relatively low levels of capacity utilization in the economy, a turnaround in investor confidence can unleash large productivity gains even with low levels of fixed investment. Nonetheless, overall, a combination of rising fiscal pressures, a developing debt overhang, and an uncertain path of inflation in the near term, significantly reduces policy space to stimulate the economy.
For the longer term, efforts to meaningfully address Pakistan’s perennial structural challenges, such as the abysmally low tax/GDP ratio and low overall productivity in the economy, are more than likely to unlock Pakistan’s substantial economic potential.
From this excerpt, one can see that there is not much to support the claim that the last few years have been the “lost years” of Pakistan’s economic history or that the economic outlook of Pakistan is dismal. Rather, there has been an impressive recovery, with good medium term prospects for the economy. Given the world financial crisis, this is no small achievement, but neither of the two writers have chosen to highlight this.
The rest of the excerpt focuses on issues that can potentially derail this recovery in the long run. These structural issues should not be brushed under the carpet, and indeed, they formed the basis of the finance minister’s budget speech. The specific issue of public sector enterprise reform which Cyril Almeida focuses on and which he claims that this government lacks the “political will” to tackle, was specially singled out by the finance minister as perhaps the major challenge that the government will be dealing with in the coming year. Rather than focusing on Raja Pervez Ashraf as an individual Mr. Almeida could have pointed out the formation, earlier this year, by the Prime Minister of the Cabinet Committee on the Restructuring of Public Sector Enterprises; or the identification in March of 8 wasteful public sector enterprises to be restructured or the drastic cuts in subsidies to public sector enterprises announced in this years budget which was criticized by many opposition parliamentarians.
Journalists should, of course, criticize the economic policies of the government, but perhaps it would be better to focus on a more balanced discourse rather than one of unmitigated negativity. The specific example of restructuring of public sector enterprises and reduction of subsidies is a very politically sensitive issue, as the strong criticism of many opposition (and federal coalition) politicians has shown. Rather than writing off this government’s attempts to tackle this issue as simply hopeless, journalists could contribute to the public discourse to explain how restructuring of public sector enterprise is necessary and that cutting of subsidies is not simply “raising prices” (which is what the popular slogans claim) but an economic necessity in order to cut public sector spending which is currently out of control. However, I suppose it is much easier to simply single out government officials like Raja Pervez Ashraf as wholly responsible for decades of state policy. The sad reality of Pakistani journalism is that it is always easier to identify villains than it is to debate policy.
“Journalists should, of course, criticize the economic policies of the government, but perhaps it would be better to focus on a more balanced discourse rather than one of unmitigated negativity.”
Could not agree more, Rabia. However, expecting a more balanced discourse from our current crop of journalists may tantamount to expecting too much!
Identifying and beating a villain instead of conducting a serious debate on policy has been a characteristic of Pakistani media; old habits die hard.
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Unfortunately, we have no effective therapies that we can offer our patients, so there is a tremendous unmet need for new and effective drugs to treat CP/CPPS,” said Anthony Schaeffer, MD, Chair, Department of Urology, and the Herman L.
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