CSS Pakistan Affairs | Strategy to Resolve Economic Crisis in Pakistan
The following question of CSS Pakistan Affairs is solved by Laiba Eman under the supervision of Howfiv’s Pakistan Affairs and Current Affairs Coaches: Miss Iqra Ali and Sir Ammar Hashmir. She learnt how to attempt 20 marks question and essay writing from Sir Syed Kazim Ali, Pakistan’s best CSS and PMS English essay and precis teacher with the highest success rate of his students. This solved question is attempted on the pattern taught by Sir to his students, scoring the highest marks in compulsory and optional subjects for years.
Outline
1- Introduction
2- Historical Overview of Pakistan’s Economy and Institutional Clashes
3- Institutional Barriers Keeping Pakistan From Escaping Its Economic Crisis
- Frequent Change in Economic Policies Hampering Economic Growth
- Military Intervention in Economic Decision Damages Economic Prosperity
- Judicial Activism Discourages Investment and Productivity
4- Comprehensive Strategy to Redefine Institutional Boundaries for Economic Prosperity
- To Set the Institutional Boundaries
- To Establish an Independent Planning Commission
- To Merge Intersecting Ministries under the Independent Planning Commission
- To Establish an Autonomous Budget Unit
- To Reimagine Cities and Empower Local Governments
5- Conclusion
Answer to the Question
Introduction
Economic growth depends on economic policies; sustainable and long-term economic policies guarantee economic growth; meanwhile, inconsistent and volatile economic policies impact the country oppositely. Unfortunately, Pakistan has been suffering from an economic crisis since its inception. Short-term growth seen in a dictator’s regime was the result of foreign aid. The blockage of that aid caused an economic crisis, and Pakistan fell into the clutches of the IMF because it always lacks sustainable macroeconomic policies. Along with Inconsistent economic policies, institutional weaknesses, unstable political governments, civil-military tensions, judicial activism, elite capture, and lack of public trust are also the major obstacles to economic growth and productivity in Pakistan. Therefore, economic policies alone cannot fix the problem; the structure to implement the policies needs improvement. Until the consensus of political leadership, military, judiciary, and civil societies on structural reforms is reached, political stability cannot be achieved, and sustainable macroeconomic policies cannot be framed. Hence, a social contract is needed to reform existing flawed structures. It is proposed to establish an independent Planning Commission and merge intersecting ministries under it. Additionally, an autonomous budget unit and an efficient state department are also needed.
Historical Overview of Pakistan’s Economy
Pakistan’s economic history has been marked by alternating periods of growth and crisis since its independence in 1947. During the 1950s and 1960s, Pakistan achieved impressive industrial and agricultural growth, earning recognition as a developing success story, particularly under the regime of Ayub Khan. However, this growth was accompanied by regional and income inequalities that contributed to political instability. The 1970s witnessed economic disruption following the separation of East Pakistan and the nationalization policies of Zulfikar Ali Bhutto, which expanded state control over the economy but reduced private-sector confidence. During the 1980s, economic growth recovered due to foreign aid, remittances, and strategic support linked to the Afghan war. The 1990s were characterized by political instability, rising debt, and repeated economic crises. Under Pervez Musharraf in the 2000s, Pakistan experienced relatively high growth fueled by foreign assistance and financial inflows, but structural weaknesses remained unresolved. Since 2008, the country has been facing recurring challenges, including fiscal deficits, energy shortages, inflation, external debt burdens, and balance-of-payments crises, leading to multiple programs with the International Monetary Fund. Statistically, its economic indicators have fluctuated widely; the sixties, the eighties, and a significant part of the 2000s registered high growth episodes over 6.0 per cent, with low growth observed in other periods. Over the last decade, the growth rate has been highly volatile, averaging around 3.6%. In short, Pakistan’s economic history reflects a pattern of short-term growth driven by external support and temporary reforms, followed by periods of instability caused by weak institutions, policy inconsistency, and delayed structural reforms.
Institutional Barriers Keeping Pakistan From Escaping Its Economic Crisis
- Frequent Change in Economic Policies Hampering Economic Growth
One of the most significant causes of Pakistan’s recurring economic crises is the inconsistency and discontinuity of economic policies across different governments. Successive administrations have frequently abandoned, reversed, or modified the policies of their predecessors, prioritizing short-term political gains over long-term national interests. This lack of policy continuity has created uncertainty for investors, weakened institutional credibility, and hindered sustainable economic growth. For instance, industrial and trade policies keep oscillating between protectionism and liberalization without a coherent long-term strategy, discouraging both domestic and foreign investment. As a result, economic actors often remain uncertain about future regulations and government priorities, reducing confidence in the economy. Therefore, Pakistan’s experience demonstrates that without policy continuity and cross-party consensus on key economic reforms, even well-designed policies struggle to produce lasting economic stability and growth.
- Military Intervention in Economic Decision Damages Economic Prosperity
Furthermore, Military intervention in economic policymaking has often undermined Pakistan’s long-term economic prosperity by creating uncertainty regarding political authority and weakening democratic institutions responsible for economic governance. Periods of military rule in Pakistan has interrupted the democratic process and concentrated decision-making power in non-elected institutions. Although some military regimes achieved short-term economic gains due to foreign aid inflows and favorable international circumstances, they failed to establish sustainable economic structures and democratic accountability. Investors generally prefer predictable governance systems where elected governments possess clear authority over economic decisions. However, the perception that economic and political policies may be influenced by unelected actors often discourages long-term domestic and foreign investment. Consequently, military intervention has weakened institutional development, hindered policy continuity, and contributed to recurring cycles of economic instability.
- Judicial Activism Discourages Investment and Productivity
Likewise, Judicial intervention in economic policymaking has also affected Pakistan’s economic performance by creating uncertainty regarding major investment and reform initiatives. While judicial oversight is essential for ensuring legality, transparency, and accountability, excessive intervention in executive economic decisions can delay or disrupt important projects. A notable example is the Supreme Court’s annulment of the Reko Diq Project agreement in 2013, which resulted in prolonged international arbitration, damaged investor confidence, and delayed the development of one of Pakistan’s largest mineral resources. Such interventions, even when legally justified, often signal policy unpredictability to investors who seek assurance that contracts and economic agreements will remain stable. As a result, delays in reforms, uncertainty in investment decisions, and increased perceptions of economic risk can reduce investment inflows and impede sustainable economic growth. Therefore, judicial institutions best contribute to economic prosperity when they uphold the rule of law while allowing elected governments sufficient space to formulate and implement economic policies within constitutional limits.
Comprehensive Strategy to Redefine Institutional Boundaries for Economic Prosperity
As civil-military tensions, a broad and complicated judicial ambit, and a lack of public trust are the major obstacles in reforming the structure to gain economic prosperity, a social contract is needed. The consensus should be made to reform a flawed structure so that the macroeconomic policies remain the same irrespective of changes in government. Therefore, the following possible suggestions are given for structural reforms. succes
- To Set the Institutional Boundaries
Every institution plays a significant role in a country’s overall progress. However, when one institution interferes in the other institution’s functions, the country’s growth would be derailed. Unfortunately, Pakistan is one of the countries where institutional boundaries have always remained A blur that hampers the country’s economic growth, for instance, as judicial and military intervention discourages investments and limits productivity. Therefore, the social contract should first establish institutional boundaries, 2D market responsibilities and prohibit institutional intervention, and promote healthy institutional cooperation. When each institution performs a designated task without intervening in others, not only would institutional efficiency increase, but also long-term effective policies would be easy to achieve.
- Establish an Independent Planning Commission (IPC)
Second, in Pakistan, the Planning Commission is highly under the political influence. It is unable to achieve its purposes: unlock productivity, employment generation, create dynamic and livable cities, optimal resource allocation without creating regional disparity, and so on. Therefore, an independent Planning Commission (IPC) is required. It should be headed by a seasoned economist rather than a politician with a fixed tenure of service, for instance, six years at a minimum. A robust, independent IPC would strengthen the planning system by minimizing the risk of corruption or undue political influence. This IPC must have public and open processes where all parties can have their say. Setting up an IPC would help build public confidence and trust in the planning system, even though individuals may disagree with specific outcomes. The IPC would also inherently ensure policy consistency in the long run.
4.3 To Merge Intersecting Ministries Under the IPC
Third, some ministries such as finance, commerce and textile, industries and production, planning and development, energy, maritime affairs and water resources have overlapping functions, yet they work separately. It is proposed that these ministries should be fused with separate wings under the IPC. Such a step would robustly enhance coordination and result in synchronized planning, optimal resource allocation, and better outcomes.
- To Establish an Autonomous Budget Unit
Moreover, the budget process in Pakistan is primarily off-track and takes a detour via the bureaucracy. In contrast, some developing countries have established an independent agency, the Parliamentary Budget Office (PBO) – an independent office that looks at the budget and national economy from a perspective that is dissimilar from that of the executives and provides an honest picture to the parliamentarians. Various parliaments across the globe also have autonomous budget units; the Philippines established its Congressional Budget Office in 1990, Mexico in 1998, Uganda in 2001, and Canada in 2006. Such units provide an independent, non-partisan view of the budget to parliamentarians and help significantly in reviewing the budget and developing an opinion on it. In this context, the Pakistani Parliament could also establish an autonomous Budget Unit, comprising top experts across the country, engaged in focused, comprehensive budgeting of the country year-round, without any political influence.
- To Make the State Departments Independent and Accountable
Last, the Prime Minister or Chief Minister should not make top appointments by hand-picking a few people of personal liking. Every authority or department’s head should be appointed on merit; give them full authority, so they can function independently, to implement their vision. However, this should be complemented with checks and balances. All the heads of public sector agencies must submit biannual reports to Parliament. Short-term targets to be outlined by the heads themselves for six months. Any head of the agency failing to meet the target below 60 per cent twice in a row should be fired.
Conclusion
In conclusion, having a long history of military interventions, judicial interruptions, policy shifts, and political instability, the only way for Pakistan to escape economic crisis is a social contract that brings the politicians, military, judiciary, and civil societies on the same page for structural reforms. These structural reforms may include responsible institutions having clear boundaries, the establishment of an Independent Planning Commission, and the merger of overlapping ministries under IPC. Moreover, this social contract should also establish an autonomous budget unit and independent and accountable state departments with economic experts and no political influence to ensure merit and efficiency. These steps would help prevent future interventions and achieve consistent macroeconomic policies that further facilitate sustainable economic growth.
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