Daily Times

The Economic Advisory Group (EAG) has called for necessary reforms to transform Pakistan into a globally competitive economy.

In a statement issued here on Friday, the EAG expressed hope, “The policymakers will undertake drastic reforms to boost the country’s economy, and will learn from these difficult times.”

“If Pakistan is to honour its external debt at a time when international financial markets are not willing to lend, then policymakers must let the exchange rate adjust and actively take measures that will reduce consumption and generate required savings to service the external debt. This process will involve considerable economic pain, and will result in low economic growth for the foreseeable future.

“Alternatively, the policymakers can choose to approach creditors and initiate a debt restructuring process. This will again come at the expense of meeting additional conditionalities agreed with the creditors, who will bear the cost of restructuring.

“None of these options are without economic pain, but a well-managed restructuring process can allow the economy to recover sooner than later”, the statement read. The EAG also suggested that there should a continuity of policies to restore the confidence of investors, local and foreign. “A policy paralysis, on the other hand, can have dire consequences”, the EAG observed.

“Unfortunately, interest groups in Pakistan have continued to capitalise on earlier crises to further their vested interest at the expense of the nation.

“The Pakistan Business Council has also historically lobbied for import of substitute policies, even when sectors benefiting from such policies have failed to compete internationally despite decades of protection.

“East Asian economies that had adopted similar policies during the 50s and the 60s were quick to appreciate the limitations of import substitution and changed direction. They opened up their economies and minimised, if not entirely eliminated, protection of domestic businesses from international competition.

“This is best appreciated by noting that the imports and exports to GDP ratio for the East Asia & Pacific region increased from 10% in the early 70s to 35%”, the statement read. Meanwhile, the Chairman Securities and Exchange Commission of Pakistan (SECP) Akif Saeed emphasized upon improving the corporate image of the insurance industry by introducing new products with greater value to policyholders, upgrading service standards and timely disclosure of customers and claims data.

He said this while talking to the representatives of the Insurance Association of Pakistan (IAP) and the Chief Executive Officers of major insurance companies who called on him Friday, said a press release issued here.

Akif was accompanied by the Commissioner SECP, Mujtaba Ahmad Lodhi, Head of Insurance Waseem Khan and Executive Director Musarat Jabeen.

He highlighted the significance of the insurance sector in the overall financial sector of Pakistan as well as on the economy of the country. He stressed the industry participants to play their due role in the development of the sector, along with the capital and debt markets of the country.

The SECP team encouraged industry representatives to share their suggestions and feedback on the way forward for a sound and orderly development of the insurance sector.

The industry participants suggested the implementation of mandatory insurance schemes including third-party liability insurance.

The IAP pointed out that the sales tax on life insurance, health insurance and reinsurance services by provincial revenue authorities significantly hindered the growth of the sector.

Furthermore, issues concerning the placement of re-insurances by the industry were also discussed during the meeting.