Conference on economic issues: Increase in exports necessary to rejuvenate economy: Ahsan

LAHORE: Emphasizing the need for devising a robust mechanism to curtail the unnecessary expenditures and to enhance the tax revenue, Federal Minister for Planning, Development & Special Initiatives Prof Ahsan Iqbal Saturday said these measures along with political stability are must to provide strong base to the country’s economy.

While speaking at a ‘Roundtable Conference’ on Pakistan’s Economics,’ jointly organized by the Planning Ministry and the Lahore School of Economics, in Lahore, Ahsan said that political instability and adventurism had been the biggest threat to Pakistan’s economy. Ahsan stressed the need to end the circular debt of the country. He termed increase in the exports as inevitable to rejuvenate the economy. He called for adopting viable Industrial policy and developing a value chain in order to make production of country useful.

He said, we stand at a critical juncture, we have two options, either, we can again go through a stabilization process and aspire for growth or we can address structural issues of economy by focusing on exports to expand its overall base and by including value-added goods and services. As of now, the top publicly traded companies of Pakistan have negligible contribution towards exports, as current incentives do not push them to do so, he said. “Pakistan needs to walk through a stabilization process but that must be coupled with long-term industrial framework that realigns economic incentives in the country due to which Pakistan’s savings are not parked in real estate/gold/foreign currency but instead goes into making Pakistan a productive economy across all sectors,” Ahsan said, adding: “We need to extend ownership of Pakistan’s reform agenda to people at large including academic/practitioners/civil society.” Ahsan said in 2018, the outgoing government’s Public Sector Development Program (PSDP) was worth Rs 1000 billion and Defence Budget was Rs 1000 billion as well whereas in 2022, the PSDP was reduced to merely Rs 500 Billion or less and the PTI’s government started to default on public payments in their last financial quarter.

Stressing the need for continuity of policies, he said policy efforts to expand a resource base in Pakistan (undertaken by the PML-N’s government in its tenure) failed to bear fruits because they became a victim of political instability. In Vision 2010, it was identified that Pakistan must expand its energy capacity (despite the fact that Pakistan was an energy surplus in 90s). However, the democratic government was thrown out and as a result, Pakistan faced one of the worst energy crises in 2010 and onwards, he said, adding: “In 2013, Vision 2025 was introduced that envisioned Pakistan becoming one of the top 25 economies by 2025, but with change of government, no work was taken.

Talking about CPEC, he termed it game changer and said the PML-N government for the first time ever transformed Pak-China strategic relations into economic relations, as a result, billions of dollars of investment started to pour into infrastructure/energy and other sectors. Thar Coal, a national resource was tapped for the first time ever. He added that energy projects were to be followed by the establishment of Special Economic Zones (SEZs) by 2024, where relocating Chinese investments (worth billions of dollars) were to be housed. However, from 2018 to 2022, “work never started on 5 out of 9 proposed SEZs and there is embarrassing progress on 4 SEZs that actually got started.” He said the entire momentum that Pakistan picked up from 2013-18 got lost to the adventurism of “Tabdeeli.”

Earlier, Prof. Dr. Azam Chaudhry, WTO Chair and Dean of Economics at LSE highlighting current economic challenges and way out for Pakistan, said that inflationary pressure is due to high aggregate demand because Pakistan has continued to spend which is illustrated by the high budget deficit. Besides, that he said a high surge in commodity prices globally, especially in fuel, volatile exchange rates linked to balance of payment problems. He was of the view that measures proposed by IMF, which the current government might be forced to implement are necessary for Pakistan’s economy. He suggested to let the exchange rate find balance in the open market, reduce the budget deficit by cutting back on the expenditures on development projects and increasing taxes.

He stated that Pakistan should aspire for higher growth but that’s only possible if Pakistan successfully stabilizes its economy.

Copyright Business Recorder, 2023