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Case of political beneficiaries

Case of political beneficiaries

 

The World Bank, in its World Development Report 2017, has revealed a not very secret fact that there is a nexus between politics and business in Pakistan as politically connected organizations received 45 percent more loans than the rest of others from 1996 to 2002. Another fact is that more than 50 percent of the politically active beneficiaries of such loans came as defaulters at the end of the day. The loan money also remained unproductive in most of the cases, costing the country’s gross domestic product of around 1.6 percent. The report says that the recipients of loans were given preferential treatment by the lending agencies and they were able to smash through the regulatory barriers. However the others, who were not politically active, faced many requirements. The bank does not rule out the growth of economies in a hostile environment where the nature of governance is not questioned, but such growth is not sustainable. No doubt good governance is the first step toward development of the economy. The countries with good policymakers, administrative and managerial skills perform better than those which run the economic affairs on adhoc basis and without developing a mechanism for the implementation of their policies. In that case, all the vital policies are issued and implemented through executive orders.

According to the bank, powerful political actors are the real problemfor the economy as they resist transition from factor-intensive growth phase to another growth model. It calls for the developing economies to revise their methods of governance to face the challenges of security, growth and equity. The institutions are held responsible for the failure of policies and reaching technical solutions. An improvement in the governance is necessary for the success of policies. The need for better governance also increases when circumstances change. Tax evasion, corruption and security are the main challenges and a credible mechanisms of rewards or punishment should be in place to streamline the affair and curb malpractices. The bank report reveals very real situation about policies and reforms, saying political expediencies come in the way of introduction of reforms and implementation of policiesin Pakistan.

The foreign financial institutions often discuss policy matters in open and point out anomalies in political and financial disciplines. In Pakistan’s case, politicians are the main beneficiaries of the government reforms and loan programme. The report covers about six-year lending during the turn of century, but the situation is not different even today. The politicians are also nationals of this country and deserve fair treatment, but they should not be allowed to exploit national resources for personal gains.