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Politics of Love and hate affecting Pakistan economy

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Muhammad Arif : Chairman Centre of Advisory Services for Islamic Banking and Finance (CAIF), Former Head of FSCD SBP, Former Head of Research ArifHabib Investments and Member IFSB Task Force for development of Islamic Money Market, Former Member of Access to Justice Fund Supreme Court of Pakistan

Political instability will remain a major challenge for Pakistani Prime Minister Imran Khan’s government in 2020.

Pakistan may have seen the worst of storms, but would have to battle against brisk headwinds of political instability, policy inconsistency, challenging external environment, slow economy and rising inflation among other distractions in its path to recovery in 2020.

Now Corona Virus epidemic and storms of pesticide has added in to these challenges.

But in spite of these challenges on electronic, social and print leaders from all sides daily malign and use abusive language for others leaving aside actual issues of people of Pakistan. Just for example take the case of Shaikh Rasheed who is being called on each electronic channel with his funny claims. Nobody question him that being Railway Minister why so much accidents have occurred in his tenure and why he did not resign for such accidents where lot of people lost their lives. Even now he has claimed that he is the main person who made nuclear explosion on 28th May. It is better that still he has not said that Atom Bomb was prepared in his Lal Haveli. Likewise on PIA crash one day before Eid nobody has resigned and nobody is taking any responsibility.

Government has now opened another Pandora box by announcing Sugar and Atta hoarding, smuggling and making money by people sitting in the government and opposition. Now on this maligning campaign has started and be sure nothing would happen to these people, only the common man have to suffer.

2019 would always be remembered as a crisis ridden year for Pakistan as the country suffered high inflation, low growth, increased unemployment, and intensied political polarization. However there was decline in the number of terrorist incidents but challenges to achieve sustainable peace still persisted.

It was expected that 2020 would be more challenging than previous year. Pakistan’s neighborhood is likely to become an even more profound geopolitical hotspot. Tensions on the eastern border would remain high. Meanwhile, the heightened threat of conflict in the Middle East can potentially have serious implications for Pakistan’s energy and internal security. Those running the country’s foreign policy would be tested like never before.

The foremost challenge for the government in 2020 would be to bring stability to the political and accountability systems. Due to absurd statements from the government side the credibility of NAB has been damaged significantly. Further for accountability only Nawaz and Zardari families are allowed to appear on the radar of NAB.

Moreover uncertainty on the political landscape could impede governance and economic reforms. It is further noted that despite the government and the military appearing on the same page, managing civil-military relations would remain a major challenge this year.

On the internal front, the government would have to implement the structural reforms. It does not have any other option. The economic recovery can, meanwhile, be complicated by risk of internal instability, Corona virus and pesticide implications along with challenges in meeting the revenue targets. Any setback in the regard could force the government to go for monetary tightening essentially meaning more hardship for the economically overburdened people.

Further as long as party structures remain weak and led by families where the highest offices have passed on in a hereditary manner, political parties will remain inherently weak and unable to mature democratically. A key implication of this situation has been the failure to build sustainable internal structures within political parties for discussions on key policy issues.

Further external environment would remain challenging this year with chances of limited conflict being imposed by India. Government here needs to pursue a regional approach to safeguard the nascent Afghan peace process from disruptions. The focal point in this is that defining foreign policy challenge will come from Middle East.

Further growing strategic competition between Beijing and Washington can harm advancing in China Pakistan Economic Corridor.

The implementation of reforms agenda agreed with International Monetary Fund will this year test decisiveness of PTI government and PM Khan on the economic front unlike anything in 2019.

It is projected that Pakistan’s GDP growth would remain less than 1.5 % because of slowdown specifically in large scale manufacturing and agriculture sectors. Furthermore it is anticipated that policy rates would further be cut in 2020, because the current rates are unsustainable.

Having repeatedly returned from the brink of economic collapse, it is high time that Pakistan may choose a more sustainable model of economic growth as the country faces a ‘now or never’ situation.

Needless to say, this would require robust policy and implementation frameworks. The celebrated economic turnaround has been seen numerous times before and should ideally not be cause for rejoice. In 2020, fiscal reforms will determine the country’s fortunes. Pakistan must ensure that planning, health and education are given their due importance if it is to make its place on the world stage.

Terrorism by religiously motivated and ethno-nationalist groups would continue to pose a serious threat to internal security. The other major challenge would come from the cyberspace. Meanwhile, it is cautioned that inimical forces would continue to exploit external vulnerabilities and internal discord and weaknesses, what is referred to as fifth generation warfare, to undermine stability.

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