Pakistan's economy dilemma

Pakistan's economy dilemma

LAHORE : The Secretary General (Federal) of the Businessmen Panel, Ahmad Jawad said further IMF package would put the China-Pakistan Economic Corridor (CPEC) at stake because the IMF does not approve of the project in view of the poor health of the economy”.

He said economic managers were at their wit’s end on how to bridge the yawning resource gap in the external account and avoid going into default on repayment of the country’s debts.

Jawad said Pakistan needed $15-16 billion worth of support but the World Bank, and bilateral credit from a consortium of donors would raise more than half – $9 billion. “We will be left with a shortfall of around $7-8 billion to bridge either through grants and assistance from friendly countries or from the IMF,” he said, adding that the country’s economy was, of course, passing through a difficult period.

It’s more appropriate that Pakistan should to seek financial assistance from China, Russia and Saudi Arabia to get out of the grave financial crisis it faces to bridge the country’s external account deficit ahead of budgetary proposals for the 2018-19 fiscal year.

He mentioned New Zealand and Kazakhstan are among other Asia Pacific countries with smaller economies but more reserves than Pakistan.

Jawad said today, several key state-owned institutions like Pakistan International Airlines (PIA), Railways, Pakistan Steel Mills, ZTBL, Utility Stores, Wapda (QESCO, HESCO, SEPCO etc) and other institutions are a major drag on Pakistan’s economy.

“These loss-making entities are presently bleeding to the tune of Rs400 billion per annum. Therefore, reforming these state owned institutions through a combination of privatisation and restructuring is fundamental,” the PML-N Manifesto 2013 put on record a base to start with.

Despite having the resurgence of loss-making public-sector enterprises a key aspect of its 2013 PMLN manifesto, the performance of the party in power has remained dismal.

The PML-N promised to initiate action to turn around the loss making state enterprises by appointing independent and professional boards who in turn appoint competent CEOs of state enterprises.

The gap between what was said and what was done has pushed the country into a deep debt trap, increased income inequality, and an increasing number of question marks hovering over the economic outlook

“Professional competence and merit will be the only criteria for appointment of boards and CEOs. The immediate task of the boards and CEOs will be to manage these corporations effectively and to plug the losses, “In this regard a unique example of appointing a Chief Executive in TDAP, where the then Premier set aside the appointment criteria and even superannuation age and appoint 70 years old and dual national person in the authority” That’s why country exports, which stood at $24.5 billion in June 2013, have decreased to $20.42 billion as of June 2017

Similarly if we look in June 2013, the Public Sector Enterprises’ debt and liabilities were Rs495 billion. By June 2017, they had rocketed up to Rs1.107 trillion, according to the SBP annual report. There was a net 123 per cent increase in PSEs’ losses in just four years. This was primarily because the government did not settle the circular debt and parked huge sums outside the budget.

Jawad further told according to a report from the International Food Policy Research Institute, Pakistan remains near the bottom of the Global Hunger Index, standing at 106 among 119 developing countries ranked. If we look into agriculture sector we got to know that our country’s agricultural sector has three major roles in the national economy: provides food to consumers and fibre to the industry, earns foreign exchange, and provides a market for industrial goods/machinery.

However, the share of agriculture in gross domestic product (GDP) has declined since independence, falling from 53 per cent in 1949-50 to 19.8pc in 2016-17. Pakistan’s agricultural performance has been poor in comparison with neighbouring India, which has conditions similar to ours.

“We’re lagging behind the Indian Punjab though the condition of soil, climate and other factors is almost same,” he says. “Similarly, we have large produce of citrus and milk and many multinational companies in the domestic market, but we couldn’t translate these factors into the export of processed or value-added by-products of the farm produce in the last five years.

Ye in five years Commerce Ministry failed to revive and restructure the Pakistan Horticulture Development & Export Company (PHDEC) to support horticulture exports, if they did timely today these non-traditional products could support country exports at a comfortable level including we failed to launch a comprehensive food policy in last five year and continuously ignore the climate change process which will hamper our agriculture sector at most in the coming years.

Jawad also viewed Government supposed to expedite four key structural reforms in taxation, energy, public sector enterprises and the reorientation of the Ministry of Finance and other economy related ministries well time before to benefit from emerging regional blocks under OBOR and CPEC.

He advised Pakistan has a sea of about 1,050 kilometres along the Makran coast with larger Exclusive Economic Zone and continental shelf. These maritime spaces offer myriad of prospects for Pakistan to exploit ocean-based living and non-living resources which can give a good buzz to our economy if the policy makers look in it.