Economic matters

With a track record of pushing through the controversial privatisation of public-sector enterprises, Dr Abdul Hafeez Shaikh has done little to dissuade fears that privatisation is one of the key items on his agenda. Talking about losses in the public sector at an investment conference last week, Shaikh reminded the audience that the last successful privatisation was under his tenure. With talks with the IMF in process at the moment, the question of public-sector enterprises is likely to be one of the crucial ones on the talks table. The finance adviser has admitted that inflation is a problem that is hurting the poor, but also says that the government needs to bridge the fiscal gap first. He has also warned, though, that the next budget will hurt the people more. And in a strange statement, he suggested during the conference that people listen to investors more than ministers. This is not something that one would want a government official to say – especially in a context where the government barely seems to have an actual plan to increase investments.The question of how the government is planning to control inflation – especially with another major jump in petrol prices just approved – has not been answered satisfactorily. Talk about the Ehsaas poverty reduction programme is all good, but how is a poverty reduction programme going to work if more people are being put back into poverty already? All the talk on the part of the government seems to have the right words, but the actual policies tell a different story. The finance adviser has also spoken of the need for human development, but how do major cuts in the HEC budget help the government fulfil this task?The government claims it wants a pro-industrialisation policy. Commerce Adviser Abdul Razzak Dawood has said that Chinese investors are ready to bring in big investments, but the real question is: when will the money flow into the country? There should be a difference between genuinely creating an investment-friendly climate in the country and appearing to be desperate for investment. Industrialisation will be crucial to improving the economy and FDI can be a crucial part of Pakistan’s future industrialisation strategy, but the government will also need to spur domestic investment. What would be interesting is if the government decides not to renew old IPP contracts, as it indicated, which would set some parameters for the right and wrong kind of foreign investment. The public relations work is all good, but the government remains far away from delivering on its big economic promises. If anything, things are moving in the wrong direction and the tide will have to be stemmed fast.

from The News International - Editorial http://bit.ly/2VNke54