ISLAMABAD: UK’s visiting professor of Economic Policy at Oxford University, Stefan Dercon, has called upon Pakistan’s elite to shun dependence on foreign loans to revive the ailing economy, saying that the privileged class of the country is losing ground and legitimacy, reported.
“The elite will have to change to build up common grounds because there is no quick fix. It can be done through political bargaining among the military, politicians, bureaucrats, intellectuals, and journalists. There is no quick fix,” former economic adviser to the Department for International Development (DfID) said while speaking on the second day of a conference, organised by the World Bank (WB), in collaboration with the Pakistan Institute of Development Economics (PIDE) here on Saturday.
Dercon said Pakistan’s elite bargain is just focused on enough stability to achieve the status quo, but there are voices that maintaining the status quo would not provide any solution. The status quo, he said, was basically a zero-sum game.
He cited the example of a cricket match where the selectors were choosing the team and players were on the ground, but this whole game was not securing the desired results.
He said the IMF’s next bailout package would not provide a solution and the same applied to getting bailout from other bilateral donors.
Dercon said Pakistan’s economy was in bad shape and there would be no one rescuing the ailing economy of the country. “The solution is to develop common grounds,” he said.
He said that Bangladesh had come out of the difficult situation and it went up to the IMF prior to the eruption of the crisis. “There is now time to unchain Pakistan’s economy and let live like other elephant economies,” he added.
To a query, he said drivers of change would bring the change but he could not predict whether it would be like the Arab Spring or whether elites would prefer to change to clinch a smooth transition in Pakistan.
WB’s Regional Director for South Asia Equitable Growth, Finance and Institutions Mathew Verghis said Pakistan’s economic model was no longer sustainable, indicating increased macroeconomic imbalances, which means continuous dependence on external partners.
It also resulted in falling living standards further behind peers and in the case of Pakistan, climate change represents a major new threat.
Pakistan, he said, has the potential for much faster growth as other countries have achieved sustained periods of rapid growth, often following moments of crisis. While growth models have differed, some critical foundations appear necessary.
He said Pakistan would have to make a major policy shift by fully exploiting the world economy, maintaining macroeconomic stability, mustering high savings and investment, letting markets allocate resources, and achieving a committed, credible, and capable government.
He said political instability and uncertainty are the primary constraints to investments, which lead to weak and often deteriorating performance against governance indicators; therefore, a broad-based political commitment was required to undertake difficult reforms.
Nauman Ishtiaq, a former consultant to the Ministry of Finance, said there was an urgent need to re-prioritise the public investment expenditures as there was a need for effective spending for achieving the quality of each penny spent from the national exchequer.
He proposed to bring changes in the Public Sector Development Programme (PSDP) and abolishing parliamentarian schemes, which were utilised on minor schemes.
In the power sector session, experts were of the opinion that improving governance was a must, as Rs11 to 14 trillion were wasted as losses of the power sector in the last decade.
Tahir Basharat Cheema said electricity was a public good and the responsibility of the government was to provide it to all at affordable rates.
