Islamabad [Pakistan], May 25: Concerned over the failure of the successive Pakistan governments to introduce reforms to improve the economic condition of the country, a former adviser to the World Bank expressed caution that that if the current Imran Khan government continue to ignore the growth and economy then there is a possibility that Islamabad could be seeking aid from Bangladesh in 2030.
Disappointed by the fact that Bangladesh has overtaken Pakistan on key economic indicators, Abid Hasan, former adviser to World Bank , writing in The News International said, ‘Over the last twenty years, Bangladesh’s GDP per-capita increased 500 percent, two and a half times that of Pakistan. How did Bangladesh become a miracle story and Pakistan a disaster tale?
,“It was unthinkable, 20 years back, that Bangladesh’s GDP per-capita in 2020 would be almost twice that of Pakistan. Bangladesh could be an economic powerhouse in 2030 if it grows at the same rate as in the past. If Pakistan continues its dismal performance, it is in the realm of possibility that we could be seeking aid from Bangladesh in 2030.”
He lamented that corruption and terrorism has hugely played their role in deteriorating the country’s economic growth.
Pakistan’s poor performance is our own fault, but our leaders conveniently blame our enemies and the IMF and World Bank. No doubt the IMF/WB have often peddled “poorly thought out and one-size-fits-all” policies and bad loans but the deep hole that Pakistan is in is largely its own doing, added Hasan.
Corruption and the economic impact of terrorism have a role in the mess, for the most part the poor performance is a result of pursuing irresponsible, inappropriate and unpredictable policies, and half-hearted reforms.
The two most glaring examples of reckless policies were: excessive overspending by government, financed by domestic and foreign debt; and imports far exceeding exports leading to unsustainable external debt, reported The News International.
Meanwhile, Bangladesh’s successful journey is a good example, given the similarity in terms of religion, poor work ethics, messy politics, bad governance, weak public administration, high corruption, elite capture etc.
How did Bangladesh become a miracle story and Pakistan a disaster tale? Questioned Hasan.
The socio-economic development story of any country is complex and unique to that country. However, one commonality among high democratic achievers is that over long periods they have by and large adhered to the key elements of the ‘Washington Consensus Policies’ – sound fiscal and monetary policies, liberalization with focus on exports, targeted pro-poor expenditures, and reduced role of government in commercial activities. Interestingly, all high achievers also had high levels of corruption.
Bangladesh encouraged savings over consumption. Its savings rate is around 30 per cent of GDP, compared to 15-20 per cent for Pakistan. Pakistan’s irresponsible and impulsive policies encouraged public spending and import consumption way beyond what the country could afford, wrote Hasan.
In 2000, Pakistan’s exports were 50 per cent more than Bangladesh. Since then, Bangladesh’s exports increased 700 per cent, almost three and half times that of Pakistan. In 2020, Bangladesh’s exports were almost twice that of Pakistan, reported The News International.
Because of imprudent import and exchange rate policies, we have been foolishly incurring foreign commercial loans, deposits and bonds, at high interest rates, to finance unnecessary imports. A stark example of this bad policy was when we imported USD 3 billion of cars and phones and raised an equivalent amount of Eurobonds, wrote Hasan.
Bangladesh’s economic miracle also benefitted from separation of religion from state, elimination of unelected institutions’ role in politics, and their leaders’ single-minded focus on Bangladesh, reported The News International.
Every government in Pakistan, including the current one, has gone around the world with a begging bowl. “We are now drowning in debt and stuck in an anemic growth orbit, and will continue to be this way since no government has pursued the deep reforms necessary to establish an economically strong Pakistan,” said Hasan.