Who manages the political economy?

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A former finance minister, an economist with the longest experience dealing with the IMF in Pakistan’s well-known dollar crises, lands in Karachi. A self-proclaimed miltablishment spokesperson reveals that economists are being interviewed to lead a soon-to-be-installed guardian organization. As if to underline the extent of the economic crisis, the vine also reports that only economists and technocrats would take a stand in the device that would last for as long as it takes to overcome the crisis. It looks like two birds were killed with one stone. Evangelist Khan was democratically expelled for his economic incompetence by looking the other way, despite his covert and open protests. The replacement – all of politics’ old guard – now faces the loudest evangelical music on the pitch, with no rearguard cover. While the captain is wreaking havoc leading to uncertainty, the courts have made their own contribution to neutrality by ruling in his favour. Whether he contradicted his own earlier decision is another matter. In the meantime, the “experienced” political eleven hesitates to act when necessary to stem the economic rot reflected by the gallop of the dollar and the prices of basic necessities. At a time when there is an unheard-of consensus across the chattering class that the government should meet IMF preconditions to withdraw subsidies on gasoline and electricity, the alliance is happy to live with the mine posed by the captain continuing to loosely fund grants. The removal of these subsidies, coupled with immediate negotiations with the IMF by a real finance minister rather than a disguised one, would have immediately signaled to the markets the clarity of the policy direction. In this fifth week of crisis, the increase in duties on luxury goods and non-essential items is too little, too late.

Is this neutrality at its best? Not really. The best is still to come. As the procrastinators continue to procrastinate and fall into the trap, the best will arrive in the form of economic guardians – a government made up of economists and all classes of technocrats who will be neutral in the sense that their decisions will not be polluted by political costs. To deal with the IMF’s possible objection to doing business with a constitutionally restricted government, the guardians will be granted a longer life lease thanks to the court opinion. The main task of the regime will be to address the growing vulnerability of the national security state in two areas. First, debt service per capita doubled from $31 in FY17 to $62 in FY20. It fell slightly to $59 in FY21, but is expected to more than double in the current year. Second, the percentage of federal tax revenue devoted to current defense expenditures steadily increased from 52.4 in FY17 to 55.9 and 68.5 in the following two years, but fell to 66 .3 in FY20, then dipped to 52.5 in FY21. In the first nine months of the current year, it has fallen further to 49. Clearly, a government operating in a financial emergency will have neither the time nor the money to relieve the suffering of the large mass of the population.

Bangladesh’s technocratic experience of 2007-09 continues to haunt. “The fact that this narrative resurfaces frequently,” writes Talat Masood in this article on October 14, 2014, “demonstrates that we either have very short memories or that there are powerful vested forces bent on sabotaging democracy to advance their personal agenda. Remember that Keynes said, “Practical men, who believe themselves quite free from intellectual influence, are usually the slaves of a dead economist.

Published in The Express Tribune, May 20e2022.

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