Painful for whom?

In the past couple of weeks, politicians from several political parties have come together in a self-professed nonpartisan attempt to generate consensus for economic reforms. Given the magnitude of the economic crisis currently facing Pakistan, and the general lack of clear thinking about solutions, any and all such endeavours are welcome.

The composition of this 'pressure group' - an ex-prime minister and an ex-finance minister among its members - suggests it has more meaningful capacity to influence conversation, especially when compared to standard advocacy efforts for reform led by academics and development practitioners. Whether it's able to move the needle within their own political parties, principally the PML-N, and influence actual decision-making in government is a separate matter.

This advocacy attempt also opens up a broader question: what would it take for a government, any government, to undertake reforms that could move the country out of socioeconomic stagnation. And yes, the problem is of both economic and social development. Pakistan has fallen behind regional countries not just in terms of economic growth over the past few decades, but also on a range of social indicators related to education, health, gender, and environmental sustainability.

In the short run, the usual discussion is that the government needs to take 'unpopular' measures. These include increasing consumption taxes, electricity and gas tariffs, and allowing depreciation of the rupee. The direct consequence of all these steps is inflationary, which is precisely why the unpopular tag is associated with them. In the medium to long run, the solution offered, including by members of the politicians' pressure group, involve limiting the government's footprint on the economy (mainly through privatisation and reduction of red tape), encourage greater investment from the private sector, and undertake productivity reforms that would allow the country to earn more foreign exchange (via foreign direct investment or exports).

'Short-term pain' needs to be made the centre of any reform conversation.

This particular set of solutions has been around for a while and its proponents can argue - with some accuracy - that it has never been fully implemented in Pakistan. Short periods of stabilisation often give way to deficit-financed, politically motivated splurges which then require painful stabilisation once again. This is the cycle that needs to be broken.

What deserves...

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