New Delhi, February 15. Pakistan’s crumbling economy cannot be fixed without first tackling its deeply flawed political system. A recent analysis in the country’s leading newspaper Dawn underscores that corruption and mismanagement in politics are the primary roadblocks to growth.
Economist Sakib Sherani, a former member of multiple economic advisory councils, argues in his piece that every economic framework is ultimately a byproduct of its political structure. When the top layer is rotten, the entire system suffers. Treating economic woes in isolation from political realities is futile.
Sherani dismisses calls for ‘deep economic reforms’ while ignoring the corrupt political order as self-deception. He insists political transformation is non-negotiable for any genuine progress. Without dismantling the current rent-seeking elite-driven model, sustainable investments fostering innovation and efficiency remain a pipe dream.
He refutes the elite panel’s notion that ‘creative destruction’ in businesses alone can drive growth. This view naively assumes internal company decisions are the sole culprits, ignoring external pressures like Pakistan’s exorbitant power costs, over 50% tax burdens including super taxes, overvalued exchange rates, rampant smuggling, and under-invoicing fueling a $68 billion shadow economy.
Formal sector firms grapple with executive overreach, regulatory overload, bribery costs, skill shortages, private spending on water and security, extortion by local gangs, political hiring pressures, and constant policy flip-flops. Blaming companies for lacking competitiveness amid these hurdles is unrealistic.
Sherani concludes that reviving Pakistan’s economy demands honest, sweeping political reforms to clear these systemic barriers and enable true competitiveness.