1 Unfinished Agenda of Reform By Hafeez Shaikh Conference at the Lahore School of Economics 24 th...
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![Page 1: 1 Unfinished Agenda of Reform By Hafeez Shaikh Conference at the Lahore School of Economics 24 th April 2008.](https://reader035.fdocuments.net/reader035/viewer/2022070323/56649e245503460f94b134ac/html5/thumbnails/1.jpg)
1
Unfinished Agenda of ReformBy Hafeez Shaikh
Conference at the Lahore School of Economics
24th April 2008
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3 Lessons of Development
• Exports
• Education
• Private sector
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3
Big Facts of Pakistan
1960s 1970s 1980s 1990s 2000s
6.97 4.58 6.09 3.86 Approx. 5.0+
1st Aid Episode
Aid stoppage 2nd aid episode
Afghan war ends --Aid cut-off
3rd aid episode/ rescheduling
Factor accumulation Populism remittance boom
incomplete IMF prog/ FCD crisis
post 9/11 remittances
Growing disparities
Industry Takeover
Institutional deterioration
Democracy / Instability
Successful IMF program/macro consolidation
Political polarization
decline of civil service
Increase in Military Expenditure
Perceptions of Mis-governance
Growing disparities
War and civil disturbance
77 + Military Rule
Missed opportunity/reform postponed
Banking reform /privatization efforts
Privatisation Results
Planning /PIDC
Government Projects
expansion of public sector
Infrastructure and IPP
Unsettled politics/limited institutional reform
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Salient Features
• Growth episodes max… 4 to 5 years
• Growth Spurts driven by aid
• Growth with disparities
• FDI and DI always low
• Structure of economy largely unaltered
− dependence on agriculture
− limited export
− limited industrial diversification
• Revenue mobilization weak (tax/GDP < 12%)
• Neglect of education and HR development
• Excessive role of government
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Recent Past – 3 Phases
• Reformist
• Mixed period – some reforms
• Drift reversal/inaction
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Emerging Difficulties
• Fiscal deficit > 7%• Increase in expenditure: 33%
−Interest on domestic debt 60% increase
• Decrease in direct taxes: 8%• Inflation > approaching 10%• Current account deficit increased by 47%• Decline in textile exports 3.4%• Declining FDI • Stalled privatization • LSM growth declined 50% (8.4% – 4.2%)• Widening regional disparities• Country wide power outages • Unchecked bloated (and growing) government
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Privatization
0
10
20
30
40
50
60
70
80
90
91 99 '00 '02 '03 '04 '05
Avg Proceeds03-05
Avg Proceeds99-02
Avg Proceeds91-99
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All Pervasive Government
Sector Policy Regulation Ownership Management
Telecom
Electricity
Steel
Aviation
Banking
Gas
Water
Petrol Stations
Insurance
Manufacturing
Retail Shops
Extraction
Ports
Airports
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All Pervasive Government (Continued)
Sector Policy Regulation Ownership Management
Real Estate Management
Land Management
Asset Management
Tourism/Hotels
Provincial Banks
Trucking
Construction
Railway
Farms/Agriculture
Shipyard
Shipping
Holding Corporations
Consultancy Services
Engineering Goods
Electrical Equipments
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All Pervasive Government – Agencies in One Sector: Fisheries
• National Level− Planning Commission− Environment & Urban Affairs Division, (MoE)− WAPDA− Federal Institutes− Federal Govt (EEZ beyond 12 n.m)− Ministry of Communications − Port Authority − Pasni & Gwadar Port Authority − Maritime Security Agency − National Institute of Oceanography − Indus Water Authority− Environmental & Urban division (MoHW)
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All Pervasive Government – Agencies in One Sector: Fisheries
• Local Level− Environmental Protection Agency− Karachi Development Authority − Sindh Dept of Forestry Fisheries− Balochistan, Dept of Forestry & Fisheries− Balochistan Development Authority − Government of Sindh− Government of Balochistan − Sindh Fisheries Dept− Balochistan Fisheries Dept− Provincial Dept− Karachi Fish Harbour Authority − Karachi Port Trust
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All Pervasive Government – Agencies in One Sector: Fisheries
• Local Level− Environmental Protection Agency− Karachi Development Authority − Sindh Dept of Forestry Fisheries− Balochistan, Dept of Forestry & Fisheries− Balochistan Development Authority − Government of Sindh− Government of Balochistan − Sindh Fisheries Dept− Balochistan Fisheries Dept− Provincial Dept− Karachi Fish Harbour Authority − Karachi Port Trust
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All Pervasive Government – Agencies in One Sector: Fisheries
Local Level (cont.)− Korangi Fish Harbour authority − Port Qasim Authority − Sindh, Environmental Protection Agency − Balochistan, Environmental Protection Agency
Gov’t of Sindh, Min. of Fisheries & Coastal Development − Gov’t of Sindh, Irrigation Dept− Water & Sewage Board− Gov’t of Balochistan, Min of Fisheries & Coastal
Development − Sindh Board of Revenue − Gov’t of Sindh Planning & Development
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Net Result
News item
EU BANS SEAFOOD FROM PAKISTAN
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What to do
Many things have to be done right
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An Important Lesson
“(an) overwhelming lesson….. We have learned in the 1990s, is … the transcendent importance of the quality of institutions and …..the efficacy of political administration.”
Larry Summers
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Where to Start
Signal intentions
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Some Actions are Better Signals
• Tackle bloated government
• Decrease government spending
• Reform ADP
• Privatize
• Deregulate
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19
Follow Up Actions
• Poverty inequality issues
• Infrastructure
• Go back to slide one