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A surfeit of plans
Friday, November 21, 2008
by Dr Meekal Aziz Ahmed
I have often wondered why we, as a nation, have this extraordinary capacity to make an awful hash of everything we do.
I have been a strong proponent of the development of some sort of macroeconomic plan which is coherent, with a clear sense of priorities, and which is realistically ambitious. I argued that, without such a plan, our economic outlook would lack focus and our "Friends" would be unlikely to be forthcoming with pledges of assistance. My pleas, as those of others who thought similarly, seemed to fall on deaf years. And then the deluge set in.
I was happy to hear that a Panel of Economists had been set up by the Planning Commission under the able leadership of Dr Hafiz Pasha. It was wishes come true. I was a little uneasy, however, about the fact that the panel seemed to be taking an inordinate amount of time to come up with a macroeconomic stabilisation and growth programme. Given Dr Pasha's ability and experience, and the ability of other members of the panel, they could have produced a plan in a week. Time was of the essence. In any event, a plan was finally produced. it was presented to the prime minister on Tuesday and, by all accounts, it appears to be a good one, well-thought-out, and supported by sound policy proposals.
Excellent, I thought; we finally have a plan, a vision of where we want to be in the medium-term. But my excitement was short-lived, because it struck me that during all this time the government was negotiating with the IMF on another plan, an IMF-Government of Pakistan plan that is set for the approval of the IMF's Executive Board shortly. As is well known, an IMF programme rests on a macroeconomic framework and a set of projections of key economic variables, usually over a three-year projection period, and a description of policies that support the projections. Are the panel's plan and the IMF-GoP plan that has been negotiated broadly consistent or wildly divergent? Quite clearly, the panel does not know what is in the IMF-GoP plan, and vice-versa. In that case, the answer to the question posed is self-evident.
In Wednesday's papers, I have learnt that the ministry of finance has a "nine-point plan." Where this has come from, I do not know. I even know less about the nine points. Even if these are mostly sectoral plans, agriculture, energy, social services, and so on, they need to fit into a macroeconomic plan. I also hear that there is to be some sort of monitoring unit, with a secretariat. The president and the prime minister will be briefed regularly on the implementation of the nine-point plan.
Thus, we now have three plans and two monitoring units. The panel's plan, the nine-point plan, and the IMF-GoP plan. If the Planning Commission is still doing any medium-term planning as per its mandate, it should have a plan as well. I know it certainly has an annual plan. So, that makes a total of four plans, with a strong probability that each plan embodies a different set of assumptions, projections and policies. This is almost preordained, since no department in government talks to the other and each jealously guards its own territory with its secrets.
I am not sure I know where the IMF-GoP plan will be monitored. Presumably in the ministry of finance, all hush-hush, with documents locked in a safe so that there are no prying eyes and no leaks on what we have negotiated and committed to with the IMF.
The ministry of finance will therefore have two plans, the nine-point plan and the IMF-GoP plan which they will monitor and implement. And I strongly suspect neither monitoring unit will coordinate with the other.
I portend a full-blown ego clash between Shaukat Tareen, adviser on finance and his plans, and Salman Farooqi, deputy chairman of the Planning Commission with his. It has been brewing for a while. This would be worth a chuckle and interesting to watch if it did not have all the makings of an economic policymaking disaster.
In a recent article, Shahid Javed Burki correctly suggested the appointment of an economic czar who would be the focal point on the economic side. He is likely to get more than he bargained for. Not one, but two czar's, each working at cross-purposes and each determined to outdo the other. I wish Mr Burki good luck with both.
In the final analysis, the excellent work of the panel has been a waste of the time and talent of Pakistan's able economists. It has taken too long. It should have been done before, not after, the IMF-GoP adjustment plan. It should have been fully "owned" by Pakistan as its plan, and presented to the IMF and our "Friends" for financing.
For too long we have been getting it backwards, not "owning" any adjustment plan we have negotiated with the IMF. But since we are usually desperate and bankrupt when we turn to the IMF, we accept their plan and conditionality with reluctance, a sense of resentful resignation, and bad faith. Then we make an awful mess of its implementation. That is also preordained.
In all this, I don't know where the nine-point plan fits in and who made it. That remains a mystery. One last thought. To add a little more confusion to the mix, even though that is the last thing we need, there must be a State Bank plan. Unless, of course, the State Bank conducts monetary and exchange-rate policy in a vacuum. Judging by its recent performance, it certainly acts like it does. That is actually a relief, though, because it means one less plan.
The writer has a doctorate from Oxford University and has worked at the Planning Commission and the IMF. Email: meekalahmed2@aol.com
Friday, November 21, 2008
by Dr Meekal Aziz Ahmed
I have often wondered why we, as a nation, have this extraordinary capacity to make an awful hash of everything we do.
I have been a strong proponent of the development of some sort of macroeconomic plan which is coherent, with a clear sense of priorities, and which is realistically ambitious. I argued that, without such a plan, our economic outlook would lack focus and our "Friends" would be unlikely to be forthcoming with pledges of assistance. My pleas, as those of others who thought similarly, seemed to fall on deaf years. And then the deluge set in.
I was happy to hear that a Panel of Economists had been set up by the Planning Commission under the able leadership of Dr Hafiz Pasha. It was wishes come true. I was a little uneasy, however, about the fact that the panel seemed to be taking an inordinate amount of time to come up with a macroeconomic stabilisation and growth programme. Given Dr Pasha's ability and experience, and the ability of other members of the panel, they could have produced a plan in a week. Time was of the essence. In any event, a plan was finally produced. it was presented to the prime minister on Tuesday and, by all accounts, it appears to be a good one, well-thought-out, and supported by sound policy proposals.
Excellent, I thought; we finally have a plan, a vision of where we want to be in the medium-term. But my excitement was short-lived, because it struck me that during all this time the government was negotiating with the IMF on another plan, an IMF-Government of Pakistan plan that is set for the approval of the IMF's Executive Board shortly. As is well known, an IMF programme rests on a macroeconomic framework and a set of projections of key economic variables, usually over a three-year projection period, and a description of policies that support the projections. Are the panel's plan and the IMF-GoP plan that has been negotiated broadly consistent or wildly divergent? Quite clearly, the panel does not know what is in the IMF-GoP plan, and vice-versa. In that case, the answer to the question posed is self-evident.
In Wednesday's papers, I have learnt that the ministry of finance has a "nine-point plan." Where this has come from, I do not know. I even know less about the nine points. Even if these are mostly sectoral plans, agriculture, energy, social services, and so on, they need to fit into a macroeconomic plan. I also hear that there is to be some sort of monitoring unit, with a secretariat. The president and the prime minister will be briefed regularly on the implementation of the nine-point plan.
Thus, we now have three plans and two monitoring units. The panel's plan, the nine-point plan, and the IMF-GoP plan. If the Planning Commission is still doing any medium-term planning as per its mandate, it should have a plan as well. I know it certainly has an annual plan. So, that makes a total of four plans, with a strong probability that each plan embodies a different set of assumptions, projections and policies. This is almost preordained, since no department in government talks to the other and each jealously guards its own territory with its secrets.
I am not sure I know where the IMF-GoP plan will be monitored. Presumably in the ministry of finance, all hush-hush, with documents locked in a safe so that there are no prying eyes and no leaks on what we have negotiated and committed to with the IMF.
The ministry of finance will therefore have two plans, the nine-point plan and the IMF-GoP plan which they will monitor and implement. And I strongly suspect neither monitoring unit will coordinate with the other.
I portend a full-blown ego clash between Shaukat Tareen, adviser on finance and his plans, and Salman Farooqi, deputy chairman of the Planning Commission with his. It has been brewing for a while. This would be worth a chuckle and interesting to watch if it did not have all the makings of an economic policymaking disaster.
In a recent article, Shahid Javed Burki correctly suggested the appointment of an economic czar who would be the focal point on the economic side. He is likely to get more than he bargained for. Not one, but two czar's, each working at cross-purposes and each determined to outdo the other. I wish Mr Burki good luck with both.
In the final analysis, the excellent work of the panel has been a waste of the time and talent of Pakistan's able economists. It has taken too long. It should have been done before, not after, the IMF-GoP adjustment plan. It should have been fully "owned" by Pakistan as its plan, and presented to the IMF and our "Friends" for financing.
For too long we have been getting it backwards, not "owning" any adjustment plan we have negotiated with the IMF. But since we are usually desperate and bankrupt when we turn to the IMF, we accept their plan and conditionality with reluctance, a sense of resentful resignation, and bad faith. Then we make an awful mess of its implementation. That is also preordained.
In all this, I don't know where the nine-point plan fits in and who made it. That remains a mystery. One last thought. To add a little more confusion to the mix, even though that is the last thing we need, there must be a State Bank plan. Unless, of course, the State Bank conducts monetary and exchange-rate policy in a vacuum. Judging by its recent performance, it certainly acts like it does. That is actually a relief, though, because it means one less plan.
The writer has a doctorate from Oxford University and has worked at the Planning Commission and the IMF. Email: meekalahmed2@aol.com
