A stable economy allows a number of problems including illiteracy, poverty and underdevelopment to be solved efficiently and effectively.
China and the United States are shining examples of strong and stable economies. States having strong economic can get their way in many situations and are respected in the comity of nations.
In Pakistan’s case, economic indicators paint a bleak picture. Having been elected for promising a quick change for the better, Prime Minister Imran Khan is facing serious backlash for his apparent failure to deliver economic growth.
The Economic Survey 2018-19 shows a gloomy picture of Pakistan’s economy. The policymakers need to take notice of the indicators and look for solutions to the problems.
The external debt and liabilities stand at $105.8 billion. Since December 2017, the rupee has depreciated around 44 per cent. To borrow a medical metaphor, the economy is on life support. The fiscal deficit stands at 5 per cent. While the trade deficit has come down by almost $5 billion, exports, too, have registered a 0.1 per cent decline.
The growth rate for the current fiscal year has been put at 3.3 per cent against the target of 6.2 per cent. Going by the consumer price index, inflation is hovering between 7 and 8 per cent. The main drivers of the rising prices are high utility rates, rising input costs and the falling rupee.
Rescuing the national economy from troubled waters and leading it to safe shores is the need of the hour
It is evident that the economy is not doing too well. The government has the responsibility to pursue rational and pragmatic policies and thereby rescue it from troubled waters and guide it to safe shores.
Here are a few recommendations in this regard:
First, an investment-friendly environment is a pre-requisite for business to do well and grow. According to the Ease of Doing Business report, Pakistan is ranked 136th out of 190 economies. It has to ease customs and tax regulations, improve the security situation, ease its visa policies and re-brand its international image as a desirable destination for foreign direct investment.
Second, Pakistan must give attention to its domestic industry i.e. expand its export portfolio and establish special economic zones and free trade zones at Gwadar. This will enhance the export growth and access to regional markets. Trade diplomacy needs to be strengthened.
Third, the government should try to broaden the direct tax base. Currently, 90 per cent of its revenue comes from indirect taxes.
Fourth, the government should uproot corruption. The menace has permeated to every nook and corner of the country and disturbed the economy.
Fifth, a large part of the economy is undocumented. This needs to change quickly. Sixth, funds to the tune of $9 billion are illegally transferred out of Pakistan. The government needs to deal with this issue.
Lastly, Pakistan should try establish a harmonious relationship with its neighbours. The trade between Pakistan and India stands at $2 billion. According to a World Bank report, it can be as much as $37 billion.
It is evident that some harsh measures are needed to beef up Pakistan’s foreign exchange reserves.
The writer is a Doctor of Pharmacy and has interest in socio, economic, religious, educational and international affairs