‘Charter of economy’

WHEN in power, all political parties resort to similar tactics to deal with the economic problems they face. They all approach the IMF and miscellaneous donor agencies for help in shoring up the balance of payments.

They all rely on ad hoc revenue measures to prevent the fiscal framework from veering too far from its moorings. They all rely on expensive and short-term commitments to bring in additional power-generation capacity into the country.

They all struggle, vainly in many cases, to prevent subsidies from eating the entire budget. They all talk of rolling back the size of the public sector. And the opposition does everything it can to stymie the government’s efforts.

Know more: EAC endorses proposal on ‘charter of economy’

They drag the courts into the realm of economic policy and create noise around initiatives that they themselves tried to undertake in the past.

If a serious push is to be made to address Pakistan’s growing and critical economic dysfunction, then this pattern of politicising economic policy must be broken. The only question is how.

The finance minister believes there should be a ‘charter of economy’, similar to the Charter of Democracy that the two main political parties signed in 2006.

On the surface this sounds like a good idea, but is it workable? Can politics really be removed from economic policy? At a more philosophical level, it is possible to have an agreement amongst the parties over broad directional matters, like privatisation, energy and normalisation of trade ties with neighbouring countries.

But in each case, questions will continue to be raised over how the directional goals are being pursued, questions such as: are valuations of state-owned assets being done transparently?

Are upfront tariffs being offered on a competitive basis? Are trade deals being pursued with an eye to their impact on local producers?

Unlike the Charter of Democracy, drawing red lines within which the parties agree to operate is next to impossible in the case of economic policy.

Clearly, the implementation of any such charter will depend on the credibility the government can put into its own efforts, and this will depend in significant measure on the government’s own performance.

Strengthening the governance framework, for instance, by strengthening regulatory bodies, can add to this credibility.

Otherwise, the effort to create a ‘charter of economy’ could end up looking like an attempt to mute the opposition — an effort that will surely be destined for failure.

Published in Dawn, February 24th, 2015