Democracy brings economic stability, affirms US official

WASHINGTON: Elizabeth Horst, a senior US official who oversees Pakistan affairs at the US State Department, has underscored the vital link between democracy and economic stability, adding that a government aligned with the will of its people was better suited to implement economic reforms.

Addressing the Second Annual Pakistan Conference at the Atlantic Council in Washington this week, she emphasised that such alignment stands as a pillar of stability, drawing in international investments.

Ms Horst, a deputy assistant secretary at the department’s South Asian bureau, acknowledged that Pakistan was facing “unparalleled economic challenges” but praised the government for undertaking ambitious reforms to improve the economy.

“The United States supports all structural reforms that the government has undertaken because we believe this will place Pakistan on a trajectory for sustainable, long-term economic growth that will support its young and ambitious population,” she affirmed.

Michael Kugelman, a specialist in South Asian affairs at Washington’s Wilson Centre, cautioned against any delays in the upcoming February elections, warning that such delays could further weaken an already fragile economy.

This statement was made during another seminar addressing Pakistan’s economic woes at the National Republican Club in Capitol Hill, Washington.

Former president of the World Bank Group, David Malpass, stressed the empowerment of Pakistani women as a means of expanding the national economy.

“Marriage and children later, education and work first,” highlighted Mr Malpass, emphasising the importance of empowering women to contribute significantly to the economy.

In addition to focusing on women’s empowerment, Mr Malpass, during his address at the Republican Club seminar, emphasised the necessity of broadening the country’s tax base and rectifying foreign exchange issues, identifying Pakistan’s escalating debts as a substantial burden on its economy.

Asim Hussain, a former IMF official, further emphasised the urgency of educating women and cultivating a technologically adept workforce to steer the national economy back on track. “Without education, I see no hope,” stated Mr Hussain.

Agha Adeel, an analyst at a private firm in Washington, argued that the present education system in Pakistan was only benefitting the elite. “Unless this is changed, Pakistan will not be able to educate its masses,” he said.

Both Mr Malpass and Mr Hussain agreed with his assessment and Mr Malpass said that this was another example of the “elite capture” of the Pakistani economy that “must end.”

Ms Horst, while stressing the need for resilience and reform, outlined five critical suggestions for substantial progress:

Ensuring a conducive environment for foreign companies operating in Pakistan; widening the tax base to augment revenue and establishing a more equitable tax system; implementing agricultural reforms to enhance crop yields, ensure food security, and promote sustainability; undertaking energy sector reforms to meet the escalating demand for clean energy; and empowering women as an economic force by enhancing their access to loans, education and simplifying regulations.

“However, I firmly believe that a robust democracy is fundamental for sustainable and inclusive prosperity,” Ms Horst emphasised.

“Supporting democratic principles such as an independent judiciary, freedom of expression, press freedoms, and the rule of law is paramount.”

The US official added: “We stand by Pakistan in its journey towards a robust democratic process.”

Pakistan’s US ambassador, Masood Khan, also addressed the Atlantic Council seminar, elucidating how Pakistan is pursuing economic resurgence through international collaboration. “We have defied numerous pessimistic forecasts in the past, and we will do so again this time,” Ambassador Khan affirmed.

Pakistan, he said, is already working on a program aimed at sparking economic growth, integrating the economy into international capital markets, and ensuring policy continuity. Additionally, a Special Investment Facilitation Council (SIFC) has been established to streamline foreign investment procedures in sectors like IT, energy, agriculture, mining, and defence production.

The purpose of these measures, he explained, is to bolster macroeconomic stability, foster social development, uphold fiscal discipline, and enhance the business climate.

Ambassador Khan also highlighted Pakistan’s engagement in the China-Pakistan Economic Corridor (CPEC) and its multi-billion-dollar investments focusing on industrial development, economic zones, education, healthcare, and poverty alleviation.

Furthermore, the ambassador showcased substantial foreign investments in various projects, indicating a promising influx of funds, including those from Canadian firm Barrick Gold and Saudi wealth funds in Pakistan’s Reqo DiQ copper-gold mine, among others.

Ambassador Khan stressed the need for increased foreign direct investment (FDI) from the US, pointing out the current FDI at $1.5bn, calling for its augmentation. He also highlighted Pakistan’s efforts in climate resilience, particularly in boosting clean energy to constitute 60pc of the energy mix by 2030, and Pakistan’s role in advocating for a Loss and Damage Fund at a climate summit.