Int’l Conference on Managing Pakistan’s Economy: SBP recommends comprehensive reform programme

LAHORE: Economists and researchers discussed their findings and gave suggestions with regard to Pakistan’s banking sector, the state of its capital markets and export-led growth, and the country’s long standing issues concerning fundamental economic rights.

They expressed these views on the second and final day of its Sixteenth International Conference on Managing Pakistan’s Economy organised by Lahore School of Economics.

With regards to the Banking Sector and Capital Markets, Dr Inayat Hussain, Deputy Governor of the State Bank of Pakistan, recommended a comprehensive reform programme to address vulnerabilities and bottlenecks across all sectors of the Pakistan economy, as the financial sector and capital markets in Pakistan remain suboptimal, and stressed the importance of documentation of the economy.

Digitalisation of the conventional banking system and a steady maintenance of fiscal deficits at a manageable level were also recommended.

Dr Jamshed Uppal, Associate Professor of Finance at the Catholic University of America, in Washington, DC, and member of the Lahore Journal of Economic’s editorial board, proposed an integrated and long-term strategy that would incorporate measures to strengthen financial institutions and markets, via public-private dialogue.

Dr Uppal suggested policies to create a supporting and complementary environment for export growth that includes dual exchange rate policy, long-term trade financing to promote exports and FDI based on increasing exports He stressed the importance of restoring fiscal balance through financial discipline to implement the required strategies for export-led growth.

Khalid Mirza, Senior Fellow at the Lahore School of Economics discussed the development and regulation of capital markets. Mirza, formerly Chairman and Chief Executive of the Competition Commission of Pakistan and Chairman of the Securities & Exchange Commission, stressed the importance of four key elements, macroeconomic stability, efficacious financial institutions, recognised government norms, and capable, empowered and independent regulators, to robust economy and financial stability.

Mirza discussed that the capital market flourishes with the supply-side financial security mechanisms and not on the demand-side – the latter for which he recommended investment banks regulated by SECP and security exchanges to provide the required financial security.

With regard to Pakistan long run issues of fundamental economic rights, Dr Ishrat Hussain former Governor of State Bank of Pakistan stressed the role of productivity, mechanisation and the service providers to enhance food security.

Some of the policies that he recommended included the income enhancement of the rural population using direct and indirect ways of increasing productivity, restructuring of agriculture institutions, availability of agriculture financing targeted to the small farmers at competitive rate and introduction of high yield, wheat and drought resistant seeds should be made available.

Dr Rashid Amjad, Director of the Graduate Institute of Development Studies at the Lahore School of Economics, discussed the state of employment and related policies and issues in Pakistan today. Dr Amjad stressed the importance of human utilisation to receive the full economic dividend.

The discussion on job creation was followed by Dr Waqar Wadho, Associate Professor and Senior Research Fellow at the Centre for Research in Economics and Business, at the Lahore School of Economics who demonstrated the technological innovation in Pakistan does induce employment growth, and that though there is some loss of jobs with new technologies, there are also more jobs that are created as a result of technological innovation.

Dr Hamna Ahmed, Assistant Professor and Senior Research Fellow at the Centre for Research in Economics and Business, at the Lahore School of Economics, discussed unleashing Pakistan’s human capital potential through education, and the disparity in gender in schools.

She recommended improving the public financing of education to bring more children to school while improving learning outcomes and overall efficacy of the education system. She also recommended offering alternative learning pathways for children who have never been to school and for the ones who drop out.

Dr Theresa Thompson Chaudhry, Professor of Economics and Co-Director of the Innovation and Technology Center at the Lahore School of Economics overviewed the health sector of Pakistan. Based on the literature she suggested use of information systems to track doctors and medical facilities to enhance the efficiency in the sector.

Ms Haja Ranaivo, Trade Development Officer of the permanent Mission of Pakistan to the WTO, introduced forums and joint initiatives to address the issues of climate change and trade.

She stressed the importance of lowering tariffs on environmental friendly goods and services. She acknowledged the contribution of Lahore School of Economics efforts to develop the policies related to trade and environment.

Dr Matthew McCartney from the Charter Cities Institute and SOAS assumed the role of the conference rapporteur and gave the conference’s concluding remarks. He commented on Pakistan’s ability to rebound quickly from the worst of the COVID-19 pandemic through good economic management, with the nation not experiencing negative growth rate throughout the COVID-19 period.

The financial situation may be chaotic, he remarked, but the underlying Pakistani economy is remarkably stable, even in the face of the floods of 2022, recession, oil prices, and the war in Ukraine. Pakistan has been resilient in the face of internal and external shocks, thanks to profound diversification.

Copyright Business Recorder, 2023