- Nothing that can’t be fixed
BY: JAWAD KAMAL
Pakistan’s economy is in the throes of crisis and facing some serious quandaries, that have put the future of this nation at stake. There is no denying that the economy plays a crucial role in the progress and development of a country. In today’s globalised world where markets hold a vanguard position an economically strong state can play a proactive role to carry out its national interests. China and the USA are shining examples of this. Unfortunately, Pakistan has failed miserably to take advantage of today’s globalised village.
If we check the sttistics, Pakistan’s economy is the 41st largest in the world. Its total size is $313 billion in terms of GDP. The Fiscal Year 2018 was the worst in the economic history of Pakistan. Additionally, increased oil prices, trade protectionism and regional rivalries affected many developed as well as developing economies. However, in Pakistan the situation became more threatening due to insufficient foreign exchange reserves, increased import bills, a deteriorating trade balance and stagnant remittances that had put the already fragile economy on the ventilators. Since Imran Khan occupied the leadership of the country, he had been facing some serious economic conundrums, and as a result, he failed to make the nation take off economically.
It is a well-documented fact that Pakistan’s economy is on the ventilator and clouds of distress are hovering over it. But it is evident beyond an iota of doubt that various remedies can easily reinvigorate the economy
On the one hand, Pakistan’ foreign debt has reached $106.9 billion and on the other hand the fiscal deficit widened to 8.9 percent of Pakistan’s GDP. The deficit amounts to Rs 3.445 trillion. Similarly, the trade deficit had also touched the historic heights of $31.8 billion, while foreign exchange reserves plummeted to a fatally low level. Pakistan was at the verge of default. So Imran Khan left with no other option than to knock at the doors of the IMF, UAE, Saudi Arabia and China for financial help. Furthermore, the energy crisis, water scarcity, over population, terrorism and non-traditional security threats are the prominent causes that have poured oil into the fire of an already devastated economy and plunged the nation into the pit of obscurity.
The repercussions of the abysmal economic condition can easily be palpable in the form of an increase in the inflation rate. According to the Pakistan Bureau of Statistics, inflation has reached 10.5 percent measured by the Consumer Price Index. Moreover, the clouds of unemployment are looming over the youth that comprises 60 percent of the total population.
However, it is the need of the hour and a gigantic responsibility on the shoulders of Imran Khan to take up the cudgels and brings Pakistan’s staggering economy from the present state of distress to stabilization. Now, at this critical juncture taking into consideration some valuable steps can easily keep the economy afloat.
Firstly, a friendly business environment is a cornerstone in the development of any economy. No doubt the World Bank has shown that there are positive signs in the ease of doing business in Pakistan. In 2019 Pakistan was 136th now it jumped to 108th position in its index. In addition, this has secured it a slot among the top 10 nations with the most improved business climate. But policymakers have to ensure the continuity of this trend and remove impediments that facilitate the flow of Foreign Direct Investment.
Secondly, security is pre-requisite for providing safe economic ambiance. There is no denying the impression that terrorism has engulfed the nation economically and wreaked havoc. Lamentably, this becomes the major cause of capital flying out to other countries. Fortunately, Pakistan has overcome this menace to a great extent and the credit goes to our brave law enforcement security forces that fought gallantly and weeded out terrorism from the country. In a report by the Pakistan Institute for Peace Studies, terrorist attacks in 2019 decreased by around 11 percent as compared to 2018 and the number of people killed in these attacks reduced by 40 percent. But the risk is still present, and it is still needed to make Pakistan a destination of peace, if foreign investment is to be attracted.
Thirdly, as afore-mentioned, the fiscal deficit had reached new heights and created economic backwardness. The Government deserves applause for starting an austerity campaign throughout the country. It is a welcome sign, but policymakers should chalk out some bold reforms, like cutting down the VIP protocol budget that is five percent of total GDP. It is an irony for that country which spent less than two percent of its GDP on health.
Fourthly, Pakistan possesses the great potential to become a tourism destination, especially religious tourism. Kartarpur corridor is the prominent example. Eye-catching and snowcapped mountains of northern areas are yet to be discovered abroad. Recently, the UN has listed Pakistan among the top 10 tourist destinations of 2020. So, tourism can easily act as a harbinger of economic revolution inside the country.
Fifthly, government must increase its tax collection base through direct taxation system and by strengthening the Federal Board of Revenue. Similarly, exports are the touchstone for today’s modern economy. So, government must design policies that facilitate exporters that ultimately benefit the economy.
It is a well-documented fact that Pakistan’s economy is on the ventilator and clouds of distress are hovering over it. But it is evident beyond an iota of doubt that by putting into effect the above-mentioned remedies can easily reinvigorate the economy.
The writer can be reached at [email protected]