The Pakistani economy is in a dire state, with catastrophic mismanagement by Finance Minister Ishaq Dar during one of the worst crises in the country's history. The PDM government's reluctance to seek a vote of confidence from the people is indicative of their complicity in this mismanagement.
According to Princeton University professor Atif Mian, a globally respected economist, the Pakistani economy has become "unhinged" and has gone "off the rails" after losing the confidence of its key stakeholders. Dr Mian describes "providing confidence" as one of the most critical aspects of policymaking, as it ensures that people remain willing to invest in the country and enable a better future.
However, Pakistan's economy has lost its credibility due to supply-side disruptions caused by Islamabad's prolonged failure to secure an IMF agreement, Mr Dar's problematic fixation on the exchange rate while reserves were declining, and his highly constrictive import policies. Dr Mian states that the country's "nervous system" has broken down, "that combination of administrative and political structures that guarantee a certain level of confidence in the economy."
Pakistan's economy is in a critical juncture, with both exports and imports declining at much sharper rates compared to regional economies, inflation "off the charts, and extremely dangerous," and the government in no position to control the exchange rate. Dr Mian has urged Pakistan to rebuild "a functioning nervous system," but no one appears to be paying any attention.
The government remains focused on clinging to power for as long as it can, putting off the politically difficult, yet desperately needed restructuring of Pakistan's economy. Dr Mian has criticized the "selfish power grabs" that have brought the country to this point and only threaten to get worse with the fresh stand-off between the judiciary and legislature.
It raises the question of whether Pakistan's power elite truly cares for the country. Do judges, politicians, and generals realize that the country is being impoverished as its capital and human resources flee to safer and more stable destinations? The ongoing slide may take decades to recover from if it is even arrested. When will they be ready to rebuild?
It is high time for the Pakistani government to take action and address the economic crisis that threatens the future of the country. The government must be willing to make politically difficult decisions to restructure the economy and regain the confidence of its stakeholders. It must prioritize rebuilding the "nervous system" of the country and ensure that administrative and political structures are in place to guarantee a certain level of confidence in the economy. Only then can Pakistan begin to recover and rebuild its future.
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