View from Islamabad: Jamali faces hard times to revive moribund economy

Mir Zafarullah Khan Jamali, Pakistan's new prime minister, who heads a thin coalition government and perhaps one of the strongest oppositions ever, is faced with the difficult challenge of reviving a largely moribund economy whose outlook in parts appears to be dim.

Although behind the scenes maneuvering has cobbled together what appears to be a stable coalition, Pakistan's challenge now is to turn that in to a workable coalition which is capable undertaking tough new reforms.

Jamali's most important saving grace may well be that in spite of such obstacles, opposition groups don't appear to be seeking to topple Mr Jamali because the fall of the new government would only strengthen the hand of General Pervez Musharraf, the military ruler, who seized power in a military coup in Oct. 1999.

Additionally, the appointment of former finance minister Shaukat Aziz as an adviser to the new government to take charge of the finance and economic ministries, is widely seen as a clear sign that General Musharraf is keen to keep a close watch on economic management.

Aziz as the Finance Minister for the past three years, oversaw economic reforms that ranged from measures to strengthen the Pakistan rupee to the revival of a dormant privatization program for state-run companies and partial deregulation of the oil industry.

Yet, despite some improvements, foreign investment remains at a modest level while poverty engulfing almost a third of Pakistan's population of 140 million is high. For Jamali, these two issues present a major challenge in reviving the economy, whose future would be determined as much by economic trends as political developments.

The new prime minister's economic success essentially hinges on two important factors. First, the extent to which the new government can successfully muster a long overdue national consensus would be important for its future.

For now, a divided parliament offers little hope for political stability, though the acumen of key members in the new government would be a significant barometer to set the course for the future.

Second, Pakistan's economic future rests on the extent to which it can witness a long awaited revival in economic growth which has remained suppressed in recent years due to a prolonged drought.

The fall in Pakistan's economic growth has had widespread repercussions for the country's economic future. Eventually, Jamali may choose to pat himself on the back, in keeping with the tradition of the government for the past three years.

But only a widening economic prosperity across mainstream Pakistan would be the important litmus test for the country's economic fortunes in turning around from their present outlook.

While Jamali's main preoccupation for now may well be securing his political flanks, his government's outlook would eventually rest on the extent to which it can turn around Pakistan's economic outlook.

For too long, Pakistanis have found themselves constantly under pressure to tighten their belts, with the result that many are not too moved about who rules the country. With bread and butter issues becoming of prime significance, politics for the average household may take a back seat.

The writer is a Pakistan-based commentator who writes on political and economic affairs.