Pakistan Economic Forum (PEF) of Pakistan Business Council (PBC) on Wednesday asked the ministry of finance to redefine its 'cap for debt' and use fiscal revenue and government share of total bank credit as fundamental yardsticks to improve debt management.
The PBC during a daylong session of PEF-II addressed major challenges of the country and drafted recommendations on water, energy, regional trade, social protection, macroeconomic stability and education. During press briefing regarding PEF-II session, chairman PBC Sikander Mustafa Khan said the event was aimed at improving business climate in the country.
He said that 45 companies had affiliated with PBC, which contributed 18 percent of total tax collection, 15 percent of total exports and some 12 percent on total GDP. Moreover, he said the PBC was striving to evolve national economic agenda through PEF and added that the recommendations finalised during PEF-II would be submitted to the new government and all major political parties with the objective of evolving a national consensus on policies to help manage major challenges of the country, successfully. The daylong PEF-II witnessed the gathering of the most prominent corporate leaders and socio-economic experts of the country.
The macroeconomic panel, headed by renowned banker and educationist Dr Ishrat Hussain recommended the ministry of finance to redefine its cap for debt and use fiscal revenue and government share of total bank credit as fundamental yardsticks to improve debt management.
The panel established that the macroeconomic environment remained depressing and the GDP growth rate in the last four years was hovering around 2.5 percent to 3 percent. It also said that a chronically weak fiscal structure had fuelled high government borrowing and inflation, leading to a fiscal deficit of 8 percent and recommended the authority to take efforts to reduce it to 4 percent.
The panel also observed that policy uncertainties and weak governance standards needed to be addressed without delay to sustain the GDP growth rate to at least 6-7 percent in the next few years. While chairing the education panel, Dr Shams Kassim Lakha said the country required policy reforms to increase access to education and improve the standard and quality of education at all levels. He said around 40 percent of students were getting education from private institutes and urged the authority to evolve policy to encourage private institutes for quality education.
Moreover, he said education budget must be increased from 2 percent to 5 percent of GDP in next five years to improve the quality of its human capital. Sikandar Mustafa Khan while heading the water panel said Pakistan was lingering just above the water scarcity limit of 1,000 cubic meters per capita. With Pakistan's burgeoning population, water is required for consumption, agriculture and industries.
The proposed Diamer Basha Dam was also heavily criticized and deemed dangerous and unsafe. The speakers termed it a double blow to Pakistan's economy and instead stressed on the need to build Kala Bagh Dam. There was however, no complete consensus on the KBD amongst the panel members.
The energy panel was chaired by Farooq Rehmatullah while Aliuddin Ansari, CEO Engro Corporation, Mumtaz Hasan Khan, chairman Hascol Petroleum Limited, Abbas Bilgrami, MD Progas Energy Limited and others completed the panel. The buzz-word was again the 'political will' and the panel highlighted how the lack of it has thrown the country's energy sector in such a mess. The panel stated that the energy crisis had retarded Pakistan's GDP growth rate by 3-4 percent in the last few years, and also deterred any substantial local and foreign investments in the country.
With the current energy projections, by 2030, energy demand in Pakistan is estimated to be almost 64 percent greater than projected supply. The panel recommended that the ministry of energy must be established to design an integrated energy plan to balance energy imports with the development of indigenous energy resources and aim for a diversified economic energy mix.
Farooq Rehmatullah was of the view that both the IP and TAPI gas pipelines are unlikely to happen and Pakistan will have to depend on its own indigenous resources for energy self-sufficiency and security. The social protection panel chaired by Dr Asad Sayeed, cited that nearly 50 percent of the population was under poverty line. However, the government spending on social protection is less than 1 percent of GDP.
The panel recommended that an efficient social protection policy should be implemented to reduce poverty and inequality in the country. Dr Ijaz Nabi while heading regional trade panel said regional trade was the greatest opportunity for economic growth in Pakistan. Pakistan and India account for 90 percent of South Asian regional GDP, yet bilateral trade between the two is well below potential. The panel recommended that strategic policy should be developed for bilateral trade with India to establish a level playing field for a sustained and equitable relationship. Trade with other regional countries also requires attention, the panel concluded.
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