FROM THE PREVIOUS AGENDA TO THE PRESENT CONSENSUS
Challenge for the new govt
By Zafar-ul-Hassan Almas

Pakistan is going to enter into the most crucial period of its political economy. A transformation from a highly centralised previous government to a newly elected democratic one is always a difficult phenomenon, especially, when the authoritarian ways of managing the economy is to be replaced by scattered political interest groups. The economic conditions are not very good because inflation is high, twin deficits are reaching new heights, external and internal debt is on the rise. Exports are shrinking and imports are rising thus leading to a massive trade imbalance. The manufacturing and agricultural sectors are not doing well and poverty is on the rise.

The new political setup has to clear many explosive land mines which are waiting for the new coalition government. The first land mine has already exploded with the spike in the petroleum prices plus wheat support price. The decision was taken after consulting the likely new ruling party, i.e. Pakistan Peoples Party. For the last eight years we have heard good news about the economic turnaround and the entry of Pakistan into the “exclusive club of fastest growing economies of the world.” But now it seems that all that was wishful thinking. The current burst of the bubble of prosperity is not unique in Pakistan’s chequered history. This happened with all the previous governments which claimed that they provided stability and growth to the economy.

Fortunately, all military governments are able to amass immense inflows of foreign exchange from foreign powers to serve specific causes. This has helped in providing a cosmetic touch to the boom in one or two areas of the economy.