“Pakistan's poor performance is our own fault, but our leaders conveniently blame our enemies and the International Monetary Fund (IMF) and World Bank (WB). No doubt the IMF and WB have often peddled poorly thought out and ‘one-size-fits-all’ policies and bad loans but the deep hole that Pakistan is in is largely its own doing,” added Hasan.
“Corruption and the economic impact of terrorism have a role in the mess and for the most part the poor performance is a result of pursuing irresponsible, inappropriate and unpredictable policies, and half-hearted reforms.”
The two most glaring examples of reckless policies were: excessive overspending by government, financed by domestic and foreign debt; and imports far exceeding exports leading to unsustainable external debt, reported The News International.
Meanwhile, Bangladesh's successful journey is a good example, given the similarity in terms of religion, poor work ethics, messy politics, bad governance, weak public administration, high corruption, and elite capture.
In just two decades, Bangladesh has overtaken Pakistan on key economic indicators. Over the last twenty years, Bangladesh's GDP per-capita increased 500 per cent, two and a half times that of Pakistan.
“How did Bangladesh become a miracle story and Pakistan a disaster tale?” questioned Hasan.
The socio-economic development story of any country is complex and unique to that country. However, one commonality among high democratic achievers is that over long periods they have by and large adhered to the key elements of the “Washington Consensus Policies” - sound fiscal and monetary policies, liberalization with focus on exports, targeted pro-poor expenditures, and reduced role of government in commercial activities. Interestingly, all high achievers also had high levels of corruption.
Bangladesh encouraged savings over consumption. Its savings rate is around 30 per cent of GDP, compared to 15-20 per cent for Pakistan. Pakistan's irresponsible and impulsive policies encouraged public spending and import consumption way beyond what the country could afford, wrote Hasan.
In 2000, Pakistan's exports were 50 per cent more than Bangladesh. Since then, Bangladesh's exports increased 700 per cent, almost three and half times that of Pakistan. In 2020, Bangladesh's exports were almost twice that of Pakistan, reported The News International.
For most of the past two decades, Bangladesh's fiscal deficit was around three per cent of GDP, while Pakistan's fiscal deficits were twice as high. Over 20 years, Pakistan's cumulative per-capita government spending was $ 4000, while Bangladesh was half of that.
“Because of imprudent import and exchange rate policies, we have been foolishly incurring foreign commercial loans, deposits and bonds, at high interest rates, to finance unnecessary imports. A stark example of this bad policy was when we imported USD 3 billion of cars and phones and raised an equivalent amount of Eurobonds”, wrote Hasan.
Bangladesh's economic miracle also benefitted from separation of religion from state, elimination of unelected institutions' role in politics, and their leaders' single-minded focus on Bangladesh, reported The News International.
“It will hurt our national ego, but the only sure way for Pakistan to accelerate growth and reduce debt, and avoid seeking aid from Bangladesh, is to emulate Bangladesh. There is no shortcut to success, except to follow prudent fiscal and monetary policies”, advised Hasan.
Every government in Pakistan, including the current one, has gone around the world with a begging bowl.
"We are now drowning in debt and stuck in an anaemic growth orbit, and will continue to be this way since no government has pursued the deep reforms necessary to establish an economically strong Pakistan," said Hasan.