New Pakistan govt vows to overcome economic challenges
Islamabad, The newly-elected Prime Minister of Pakistan Imran Khan has vowed to take extreme measures to overcome the economic challenges the country is facing right now.
At the very outset, the new government is facing an economic crunch, which requires austerity measures; slash down on non-development expenditure and effective steps to enhance tax revenue collection.
There are reports that Premier Imran Khan-led Pakistan Tehreek-e-Insaf (PTI) is reportedly going to follow the transparent governance model of Sweden, which has the lowest levels of national debt, low and stable inflation and a relatively healthy banking system among the European Union states.
There is growing speculation that the country will have to seek a loan package from the International Monetary Fund for the second time since 2013, amid fears of a balance of payments crisis.
Dr. Salman Shah, an economist and former finance minister of Pakistan talking to Islamic Republic News Agency (IRNA) said that for the current government main issue is balance of payment because they have very large trade deficit, the imports and exports' difference is almost $ 30 billion.
It translates into current account deficit of about $ 18-20 billion which needs to be financed, he added.
The economist went on to say that foreign debt is also very high.
I think that financing the deficits and bringing in the reforms to reduce the current account deficit will be the real challenge for the new government, he said.
Dr. Salman Shah added that once they achieved some sort of stability and balance of payments then 'we need to improve the competiveness and productivity of the economy which basically means that production sector, the agriculture sector have to be reformed for the improvement in productivity'.
The government should also focus on completing the China-Pakistan Economic Corridor (CPEC) project with China and integrate the economy with great Chinese economy.
I don't think that bringing the price of dollar down is the objective of the government, the objective would be to control decline in reserves, you need to build up the reserves from where they are today and multiple initiatives need to be taken to ensure that, he said.
Dr. Shah added that the government should go to the IMF for loan, but it should also explore other options and maybe a combination of different initiatives, including going to the IMF would be a good idea.
The Pakistan Business Council (PBC), the association of leading Pakistani manufacturers, has already given Make in Pakistan as its main advice to the new government.
According to PBC, adopting a 'Make in Pakistan' approach to strengthen domestic industry will create much-needed jobs as well as promote value-added exports and import substitution.
It says Pakistan is rapidly losing its share in world exports whereas Bangladesh has more than doubled its share in the last 15 years. The government must identify and reverse the factors undermining domestic industry to drive up value-added exports and promote import substitution.
This is not for the first time that such a call is given and this is not for the first time that the government will be listening to this.
As a matter of fact, export-orientation and import substitution have always featured high on the government's policies since the 1960s.
Pakistan minister of finance Asad Umar had once stated that the PTI government would arrange roadshows at important destinations of the world for getting substantial investment through a dollar denominated bond after assuming reins of power.
Also, he said before finalizing any decision by end of next month, he would approach the parliament first. He expressed that he wanted to go to parliament and a debate should happen on any direction the government adopted for the economy.
Umar stressed the real picture must be put forth before the parliament, especially regarding the numbers in the budget which would require to be reworked.
Former President of the Federation of Pakistan Chambers of Commerce and Industries (FPCCI) Zubair Tufail told IRNA said that the new government in Pakistan is fully capable to overcome economic challenges and to bring the economy of the country on right track.
But we have to keep one thing in mind that no government can solve all the issues overnight, we have to give them some time, he said.
He added that Prime Minister Imran Khan and his team is working very seriously to solve Pakistan's economic woes and 'you will be able to see the results very soon.'
Expressing his views, the businessman said debt crisis, depleting foreign reserves, high energy process are the major issues of Pakistan.
Our cost of production is very high which is affecting our economy, he added.
The businessman said that former governments have left the burden of high debts on the new government. but 'I am hopeful that the things would be managed'.
Zubair Tufail went on to say that going to the IMF is one of the options for the new government to overcome economic problems.
He added the government has initiated many austerity measures to control the economy which is a good step to solve Pakistan's problems.
Source: Islamic Republic News Agency - IRNA