Terming slow economic growth rate a national security challenge, Federal Minister for Planning, Development and Reforms Khurso Bakhtiar on Wednesday stated that the government will make all-out efforts to put the economy on right track.
He said this while addressing the 34th annual general meeting and conference of Pakistan Society of Development Economists (PSDE) titled "Pakistan's Economy: The Way Forward" organised by Pakistan Institute of Development Economics (PIDE) in collaboration with other partners. Other sponsors of the conference included Friedrich Ebert Stiftung, International Food Policy Research Institute, HEC Pakistan, The Asia Foundation and Pakistan Poverty Alleviation Fund.
The minister said that the growth strategy of government will focus on building and strengthening of economic fundamentals and an investment strategy for efficient resource allocation.
"Over the past five years global crude oil prices reduced to record low levels but the economic managers in Pakistan failed to take the advantage. We need structural reforms for which political will is required," the minister said. He added civil service reforms are also need of the hour. Pakistan has significant human resources and potential but needs to utilise these resources properly.
"We have to make painful decision and in the short run inflation will go up. When Pakistan People Party came into power ion 2008, it inherited 14.1 percent inflation which within first few months of the PPP govt crossed over 21 percent. Similarly Pakistan Muslim League (Nawaz) government inherited nearly 5 percent inflation and took it 8 percent within first 100 days while Pakistan Tehreek-e-Insaf (PTI) government inherited 5 percent inflation which during the first 100 days of the party government has just crossed 6 percent," said the minister while defending the PTI government's policies.
He said media and intellectuals economists will have to play a critical role in taking the country forward. "China's global exports are $1.8 trillion. Our exports to China are just $1 billion while imports are $18 billion. Value addition is needed in Pakistan and first special economic zone will be inaugurated in first quarter of next year. Circular debt has crossed one trillion rupees mark," he said.
Bakhtiar said that the quantum of consumption in Pakistan is at 90% of GDP, highest among the emerging economies. In comparison to this, in Bangladesh consumption is about 74%. The minister said that neighbouring countries India and China are sustainably growing at 8 percent and 7 percent per year respectively while Pakistan which is the 6th most populous country of the world economically is growing merely at 4 percent. "Our growth strategy should focus on building economic fundamentals, such as quality and inclusiveness of economic growth, human capital and sustainable agriculture," he said.
He said that economic growth has become a challenge for national security and the country is needed holistic structural reforms. The minister further said that dollar rupee disparity has made imports expensive and exports cheaper that creates the biggest challenge of current account deficit. "Another serious challenge is our saving rate. Our saving rate is just 10 percent of GDP compared to 30 percent in India," he added.
Due to lack of political will all these fundamental structural reforms were not made in the past. "We are cognizant of these challenges," he added. He said that though some reforms would be tough in the short-term, there is no alternative to this.
He further said, "Though we marginally improved on the Ease of Doing Business Index, it is not sufficient. Holistic reforms are needed. I would dare to say that our economic growth has become a national security challenge."
He said that private sector investment is just 10 percent of GDP which is lowest in the region. The country's economy is based on imports and that is why it is facing current account deficit challenge. Further tax ratio of Pakistan is lowest in the region, while the country is confronted with unemployment challenges as SME sector was neglected which is one of the major sources of employment. Agriculture sector was also neglected. The people have voted PTI for bringing a change.
Bakhtiar said that Pakistan and China will sign an industrial cooperation framework during meeting of Joint Cooperation Committee on China-Pakistan Economic Corridor (CPEC) scheduled next week on December 20 at Beijing, China.
The framework agreement would help move forward with relocation of Chinese industries and large-scale investment in Pakistan, said the minister, adding that the 8th JCC would prove as foundation to ensure implementation of this important sector.
Highlighting the importance of Special Economic Zones, he maintained that the industrial parks would be developed aligned with local available resources. "We will promote such investments that help in import substitution and value addition of the products in order to help balancing Pak China trade," he added.
Earlier Vice Chancellor PIDE President PSDE and member Economic Advisory Council Professor Dr Asad Zaman said that there are many wrong theories widely accepted by economists and cost of these wrong theories is incalculable. He said that social science today is abused. He said that the popular theory of economics that the ultimate goal of human being is to maximise utility is ridiculous and has been proven false by the several methods including Game Theory. Asad said, "The problem of scarcity, which has become central in economics, comes into consideration only if we consider the wants, and in terms of necessity, there is no scarcity." He said that a society based on the care of others and cooperation is the potential solution to many problems.