If at all the general elections are held on the scheduled date of February 18, the new government, besides having an uphill task of forming a coalition, will have a phenomenal job at hands to correct the security, social and economic problems caused by Pervez Musharraf’s rule of past nine years.
The policies of the economic managers and security officials in the past five years have evidently backfired, as the country passes through the worse times as far as the security and economic situation is concerned. The Atta shortage, electricity load-shedding, the natural gas shortage, the suicide bombings—all are already playing havoc with the lives of the people—a legacy that the former government, despite its tall claims about economic growth and political stability, has left behind.
By all accounts, the previous rulers and their chief patron who still rules have passed the buck of their utter economic and political failure on to the new government of elected civilian politicians.
To start with, the new government will have to find out a team of new economic managers with appointing people who have better understanding of the local environment and the needs of common people. Besides correcting the wrong policies of the past, the new managers will have to be careful in dealing with some of the policies and probably not change the ones that proved beneficial. The task of putting the economy and security situation back on the right path won’t be easy, but this would be the first and foremost challenge for the new government in office.
The question that arises from appointing a new team of economic managers is that why change them if some of the current policies were beneficial for the country. The answer is that if some macroeconomic policies such as the privatization plan, raising funds from abroad in the shape of foreign currency bonds or global depositary receipts proved fruitful, the shortage of wheat, electricity, gas and water gave rise to the worse crisis seen in recent history of the country.
The macro-economy appeared to be booming with the size of the GDP increasing to $146 billion on average 7.5 percent expansion in the past four years, foreign currency reserves jumping to $15 billion and adequate as about 40 percent of the country’s foreign debt and production of cars and motorcycles cellular phone subscribers increased.
The question is that how has that helped the general public? The fruits of GDP growth certainly did not trickle down to the people when compared to the fact that shortage of wheat persisted and the black outs compounded the sufferings of the people. The wheat shortage has caused the price of flour to rise, triggering inflation that has certainly broken the back of the people.
The new government probably won’t need to turn around the economy drastically but what it would require to do is that it will have to formulate very basic policies. While the macroeconomics may not be changed quite a lot, the microeconomics may need drastic improvement. The wheat shortage has definitely caused embarrassment to the government and this is the reason that the former ruling party PML(Q) leadership has started blaming the Shaukat Aziz government and the caretaker government of causing the wheat and electricity crisis.
Federal Caretaker Finance minister and economic manager of the Shaukat Aziz, Dr Salman Shah, the other day has hinted that taking into account the global oil tariff, the petroleum prices will be increased any time after the elections.
The tariff increase of petroleum products in the international market will no doubt be a challenging task for the new government. Though, the sitting caretaker government has capped the prices of petroleum products to an average $60 a barrel, the international prices are floating between $80 to $90 a barrel.
The existing price is very high vis-à-vis purchasing capacity of the people of the country and the economic feasibility of the industries. Any further increase in the petroleum prices will drastically hurt the common man, since as a result of the increase in fuel prices, the prices of all the basic commodities and services will increase.
The power outages have shut down almost the entire industry in Pakistan. An official at a textile maker said that the entire industry was losing export orders because they were unable to meet demand from western countries as the power cuts had reduced production. Now if the microeconomics doesn’t work properly, it has all the potential to hurt the macroeconomics. The All Pakistan Textiles Mills Association (APTMA) in a newspaper advertisement last week said that the Pakistani textile industry may lose export orders worth about one billion dollars because of power outages, which can damage the overall exports of the country.
With this wheat and electricity situation in mind, the political parties are going into the election campaigning. The opposition parties are very effectively exploiting the situation in their favour, while the former ruling party is finding very difficult to justify their request to the people to return them to power given their past performance. In case the elections are held free and fair and Musharraf doesn’t interfere on the voting day and in post election results, his favourites may not get approval of the voters based on the past performance. No matter who forms the government, the need will be a change in the economic team, may be not so much change in the entire economic policies. The reason for the drastically changing the economic policies is that it also scares away the foreign investors and shatters the confidence of local investors. While keeping in tact the major economic policies, the new economic team may need to reform the microeconomics effecting the domestic economic situation.
The economic reforms largely depend on the security environment in the country. If the people and the domestic investors are concerned about their investment and businesses, the foreign investors and tourists will stay away from the country. Suicide bombings, kidnapping for ransom, organized crime and white-collared crime cause an economic downturn and all four aspects of the security lapse seem to be on the rise. Musharraf, since taking over power in 1999, has kept the issue of security policy including its designs and implementation to himself dealing with directly. More so he has made it clear that he intends to keep the security policy to himself even after the formation of the next government. His claims, for the past many years, that Pakistan is winning the war against terrorism and that the security forces have crushed of Al-Qaeda and Taliban is are taken with a pinch of salt when seen in the context that the militants now seem more organized and determined to destroy social fabric of the country. The militants, who until a few years ago, were restricted to the tribal areas or were hiding in the mountains have become more organized and threatening. The military officials and police are directly being attacked by suicide bombers and militants while the general public is becoming the indirect victims of their terrorist activities. The cities and settled areas, of late, have become the prime targets of suicide bombings, an unprecedented thing in the history of the country.
The entire nation is worried about the security situation worsening with every passing day and the people are raising questions as to how the new government will tackle the terrorism issue. Most analysts believe that once free and fair elections are held and the nation is allowed to choose their genuine representatives, unlike the 2002 elections when the vote was allegedly vastly rigged people did not get to see their genuine representatives in the parliament, and the military returns to the barracks, the issue of terrorism will subside gradually. However, the new government will still have to completely reform the security policy and bring the people of tribal areas and the religious groups into mainstream in an effort to curb terrorism and to convince the supporters of these terrorist groups to turn away from them.
For the next government the foremost requirement will be to provide security to the people so that they are not only safe but also feel safe in an environment where they can do their businesses without any fear. Once the security situation improves, money will find its way into the economy of a nation of 170 million people. The investors look at the consumer market and Pakistan provides them a bigger market than most other developing nations with its population and the desire of the people to enjoy the fruits of a developed economy.
