1 Unfinished Agenda of Reform By Hafeez Shaikh Conference at the Lahore School of Economics 24 th...
-
Upload
jeremy-golden -
Category
Documents
-
view
213 -
download
0
Transcript of 1 Unfinished Agenda of Reform By Hafeez Shaikh Conference at the Lahore School of Economics 24 th...
1
Unfinished Agenda of ReformBy Hafeez Shaikh
Conference at the Lahore School of Economics
24th April 2008
2
3 Lessons of Development
• Exports
• Education
• Private sector
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
4
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
5
Recent Past – 3 Phases
• Reformist
• Mixed period – some reforms
• Drift reversal/inaction
6
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
7
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
8
All Pervasive Government
Sector Policy Regulation Ownership Management
Telecom
Electricity
Steel
Aviation
Banking
Gas
Water
Petrol Stations
Insurance
Manufacturing
Retail Shops
Extraction
Ports
Airports
9
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
10
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)
11
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
12
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
13
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
14
Net Result
News item
EU BANS SEAFOOD FROM PAKISTAN
15
What to do
Many things have to be done right
16
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
17
Where to Start
Signal intentions
18
Some Actions are Better Signals
• Tackle bloated government
• Decrease government spending
• Reform ADP
• Privatize
• Deregulate
19
Follow Up Actions
• Poverty inequality issues
• Infrastructure
• Go back to slide one