‘Economic Resilience Act' — II

Business Recorder

2 days ago

Within economy, relegation of Ministry of Finance (MOF) to purely financial matters, and instead forming a 'Ministry of Economy' (MOEC) as the main ministry for the overall economic policy.
Moreover, while the State Bank of Pakistan's (SBP's) independence continues to get protected, legislation towards the proposed 'Economic Resilience Act' (ERA) should ensure footprint of the proposed MOEC and greater footprint of MOF in the Monetary Policy Committee (MPC) of the SBP; one guiding example could be in the shape of fiscal-monetary policy coordination framework as adopted by the Monetary Authority of Singapore (MAS).
Here, Ministry of Planning, Development & Special Initiatives should be abolished, along with Ministry of Economic Affairs, and within it the debt department. Moreover, MOEC should also nurture active technical collaboration of overall economy, and sectors with international academics, and policy and research institutes for improving knowledge base of policy.
'Economic Resilience Act'—I
Planning, including industrial policy, overall pricing policy — and subordinating project planning to overall programme planning at the sectoral level – external economic affairs negotiations, and debt management should come within the ambit of MOEC.
For project life cycle or loop, that is, feasibility, release of funds, progress evaluation, and feedback, a 'Pakistan Development Bank' should be formulated, which should also highlight development finance needs. Overall, MOEC should also recommend policy for effectively improving the footprint of government in monetary policy committee (MPC) of SBP, and in rationalizing the 18th Constitutional Amendment, and 7th NFC (National Finance Commission) award for better sharing of responsibilities and finances with regard to for instance, interest payment, and welfare needs.
An important feature of economic resilience that should be focused upon is reaching economic data resilience. There should be an independent office called 'Pakistan Statistics' (PS), for instance, for the purpose of meeting the criterion of resilient data. PS should be the main provider of all statistics as one window, where producers of a particular statistics, SBP, Federal Board of Revenue (FBR), respective ministries also continue to make their statistics public for meeting transparency, and independence of individual sectors. Pakistan Bureau of Statistics (PBS) should be abolished since it does not provide all the statistics, and replaced with the proposed PS.
The proposed ERA should approach taxation and debt in a non-neoliberal way, whereby for instance, progressive, and broad-based domestic resource mobilization policy should be adopted, along with adopting non-austerity, counter-cyclical policy to check unsustainable build-up of debt.
Serious advocacy should be focused upon by involving, and tasking Ministry of Foreign Affairs (MOFA) for pushing for greater, and more meaningful release of climate change related International Monetary Fund's (IMF's) special drawing rights (SDR) allocation over the medium to long-term, improving the debt restructuring framework, adoption of progressive international taxation, and significant increase in finance with regard to sustainable development goals (SDGs), including overall climate finance.
Within economy, the ERA should focus on aligning pricing and value in terms of productive, and allocative efficiencies. This would necessitate greater marker co-creating role of government in terms of both putting in place a price control policy – on the lines adopted by China, for instance, through its 'dual-track' pricing framework – and overall complementary governance- and incentive structures for better price discovery for reaching consumption and investment decisions that improve the quality of economic growth, rein in the influence of supply side determinants of inflation, including transaction costs, enhance domestic production, especially of strategically essential-natured commodities, and help increase exports of more value-added goods and services.
Moreover, the scope of pricing should include coverage of all efforts within the economy, that is enhancing the basket on which consumer price index (CPI) is based to include pricing of essential natured goods, services, effort/labour, and capital, and include checking both 'seller's inflation' and over-profiteering in general, and adequately meeting economy's welfare needs in terms of reaching an appropriate level of pricing of welfare.
This would require the proposed ERA to legislate needfully in both the real- and financial/monetary sectors, and in particular establish a 'Price Commission' (PC), to overall evolve implementation capacity of 4 'Es' so that optimal pricing can be reached as much as possible in terms of reaching much better productive and allocative efficiencies, and in significantly reducing income, and wealth inequalities which, in turn, would also improve political voice.
Moreover, the role of government should be to play an active role in market creation, while shock therapy policies should not be adopted. At the same time, proposed ERA under the non-neoliberal, social democratic influence as was done successfully by the Scandinavian countries in general, and by China under the influence of state capitalism. Strategic state-owned enterprises (SOEs) should be kept under government control, where rather than privatization, greater involvement of private sector under overall government control should be adopted through moving towards a mixed-ownership enterprises (MOEs) model; a public-private partnership model adopted by China.
Within epidemiology related resilience, policies need to be legislated under the proposed ERA that drastically improve the pharmaceutical sector, including enhancing vaccine production, and hospital modernization in a mission-oriented way, and on the lines of non-neoliberal institutional reform strategy; for instance, social democratic model, as adopted by the Scandinavian countries, could serve as a major guideline in this regard.
With regard to election related resilience, the proposed legislation should focus on the whole ladder of democratic pre-requisites, especially significantly reducing the role of election campaign financing of political parties, and institutional basis of elections including reforms of elections governing body, that is the election commission of Pakistan (ECP), and modernizing actual voting procedure to reduce rigging, and improve transparency, and timeliness of results announcement.
An important pillar for ensuring election related resilience is strengthening democracy by implementing local democracy. Here, it is important that national finance commission (NFC) award gets properly distributed up to this third tier of government. The proposed ERA should legislate strict binding in terms of timelines on federal- and provincial governments so that this third tier of government
More broadly, for laying a deeper basis for nurturing democratic culture, reaching appropriately much more informed demos, and having greater capacity for critical thinking requires formal education up till the secondary school certificate (SSC) level to include compulsory teaching of political science, political philosophy, and political history. In addition, education up till the same level should include teaching about these 4 'Es', once again to enable demos better understanding about these important aspects of resilience.
Moreover, the ERA should also contribute in creating meaningful understanding about the importance of resilience. Education up till the SSC level should also include teaching about sustainable production systems, knowledge about healthy food consumption choices in terms of a balanced diet as part of the overall effort for nurturing greater resilience among individuals, and at the societal level.
Physical economic infrastructure also needs to be envisioned on mission-oriented and purpose-driven lines. For instance, 'rectangular development hubs' (RDHs) should be established in federal capital, in provincial capitals, and in all 100 plus cities. Here, each physical side of the infrastructure should represent policy formulation and implementation aspects in terms of economy, environment, epidemiology and election on the lines of institutions or ministries, and underlying organizations or departments and SOEs/MOEs in the public sector, private sector firms, and markets.
Just like data connectivity, rail connectivity for public and goods transport is essential as a reliable source of transportation for significantly reducing carbon footprint and for lowering the import bill of oil, for which rail network – including under-ground railways or subways in cities — needs to be established. Given the immense importance of railways, the proposed ERA should legislate towards a consensus-based, mission-oriented railways reform strategy both in terms of implementation timelines, and arranging needed finances/funding.
Economy and within it foreign investment cannot function in a sustainably resilient way if a purpose-driven, mission-oriented approach on non-neoliberal lines is not adopted, and if the other three aspects – environment, epidemiology, and election – are not coming together in its support in a sustainably resilient way, especially in a world of fast-unfolding climate change crisis. This is also important for retaining essential level of intellectual base in terms of human resource within the country, which would help better harnessing of opportunities, for instance, in the financial sector, especially artificial intelligence (AI).
Particularly with regard to achieving resilience in the economy, and elections, legislation within the proposed ERA should focus on enhancing institutional capacity to check financial crime, including offshore financial crime, and corruption. Here, possible areas include creating resilient investigation, and much improved judicial dispensation require within the proposed ERA, formulation of independent and more effective independent body for overseeing financial matters of individuals – public office holders, public servants, and private individuals and businesses — and increasing the technical, manpower, and oversight capacity of judiciary.
The proposed ERA should task MOEC and SBP to establish independent 'Islamic Economic Wing (IEW) of MOEC' and Islamic Economic Wing (IEW) of SBP, respectively. Legislation thus advised from each source should then be put forward in parliament through MOEC's minister for discussion in parliament for possible legislation with regard to shaping the overall economic policy, and – including monetary and financial matters, especially with regard to 'riba' — on Islamic lines in a mission-oriented, and timely way.
Here, documents shared for discussion in parliament should include up to four documents if there are meaningful differences – that is, from (i) IEW of MOEC, (ii) IEW of SBP, (iii) SBP (holding opinion beyond the IEW of SBP, where both documents coming through SBP, but that of IEW not requiring approval from governor of SBP) and from (iv) MOEC (holding opinion beyond the IEW of MOEC, where both documents coming through minister of MOEC, but that of IEW not requiring approval from MOEC of SBP).
These documents would ensure provision of independent opinions for parliament to legislate with its own acumen based on all information; with judicial oversight recourse available to judiciary itself as per judiciary own judiciary's oversight responsibility of legislation as per the Constitution, all of government and private individuals.
(Concluded)
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