There is still uncertainty in official circles around the prime minister’s decision to outsource the planning when the new International Monetary Fund (IMF) program script has already been finalized, even as the UK government begins encouraging Pakistan to create a “home-grown” economic plan.
Members of the PM’s committee on the domestic economic growth plan and Foreign Commonwealth and Growth Office (FCDO) policy advisor Stefan Dercon met with Pakistani officials on Monday.
They called separate talks with PM Shehbaz Sharif and Finance Minister Muhammad Aurangzeb.
This month, the Prime Minister’s Office expanded the committee’s composition overseeing the domestic economic development plan by including Dr. Adnan Qadir Khan, FCDO’s top economist, and Professor Stefan Dercon, the organization’s policy advisor.
Stefan Dercon has already drawn attention to the problem of Pakistan’s elites seizing wealth, which has impeded the nation’s development. This month, Professor Adnan reaffirmed that an IMF program would not be necessary for a nation to run smoothly.
Speaking with FCDO representatives at this point implies that there isn’t much room for maneuvering outside of the IMF’s framework for execution, even though the government has almost set the course of its future economic policy trajectory under its direction.
In addition, the planning ministry has released the long-term 5Es framework, which includes exports, e-Pakistan, energy, environment and climate change, equality and empowerment, and environment and climate change. These are important areas of focus for Pakistan’s future growth.
There was much misunderstanding in these talks about why Pakistan was negotiating a deal with the IMF and why the UK government should be involved.
Without achieving a staff-level agreement, the IMF returned to Washington and is now awaiting National Assembly approval of its mandated budget before making any agreements.
Economic planning is the responsibility of the Planning Ministry under the Business of 1973 regulations. However, it has been eclipsed by the Finance Ministry’s expanded role.
The planning ministry and the IMF no longer frequently discuss medium-term economic estimates. Therefore, the ultimate goal of economic policies is being presented as budgetary consolidation, which stifles economic growth.
According to a committee member who spoke on condition of anonymity, the members of the homegrown committee were also unclear as to whether their input had been asked for the budget or the IMF program and to what extent their recommendations could be integrated under the IMF program.
According to another attendee, there were more questions than answers in these meetings.
One of the attendees mentioned that the goal needed to be clarified and communicated appropriately during the discussion with the prime minister. Additionally, the need to support these reforms was emphasized.
The planning ministry claims that Pakistan may overcome its economic difficulties and reach a trillion-dollar status by 2035 if it continues to develop at a rate of 7%. However, assuming economic stability persists, Pakistan’s economic growth will likely range from 4% to 5% over the medium to longer term, according to IMF predictions based on its staff level analysis.
It has also been predicted that the planning ministry’s 5Es framework—exports, e-Pakistan, environment and climate change, energy, equality, and empowerment—will mark a critical turning point in Pakistan’s progress toward long-term, sustainable economic growth and development.
In addition to addressing environmental issues and climate change, the 5Es framework seeks to secure inexpensive and sustainable energy solutions, establish a knowledge economy, encourage equitable economic growth, and provide universal access to social safety, health, and education services.
The government hired Stefan Dercon because of his economic research in Pakistan.
Dercon claimed that Pakistan’s elites are fighting for control over resources and authority to create a clientelism-based patronage state. He made it clear that their motivation would not come before the nation’s economic progress and expansion.
Dercon maintained that powerful elite groups, including the top members of the political and business classes, the military’s elite members, the top civil society figures, the top civil servants, intellectuals, and journalists, were involved in an underlying elite bargain for the status quo.
He claims that all of these organizations have an unspoken understanding of upholding the status quo and that neither the military nor the ruling political class is primarily motivated by growth and progress. To seize control and maintain the clientelist state, those in positions of authority would try to undermine any stability.
Dercon contends that expansion and development would upend the current status quo and, as such, conflict with these parties’ objectives.
During the PM’s meeting, Planning Minister Ahsan Iqbal mentioned that Pakistan’s growth will remain constrained without peace, stability, policy continuity, and reforms. He emphasized that even a Nobel laureate would not help Pakistan in such a situation.
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