SBP for shock absorbing economy
AS world oil prices are skyrocketing and touching $120 dollars a
barrel and slow down of economy in US and Europe which will surely
impact other parts of the world, State Bank Governor Dr Shamshad Akhtar
has timely pleaded that Asian economies need policies capable of
containing external shocks.
Delivering a key note lecture on “Asia: Impact of Recent Global
Developments and Central Bankers’ Response” Dr Shamshad Akhtar said
Asian Central Banks and governments need to better integrate with each
other to mitigate and hedge such risks in the future and work for
developments in their own region. Coming back home, Pakistan faces the
looming threat of a sharp economic downturn in the backdrop of high
inflation, global financial, oil and food crises, energy shortages,
capital flight, stagnant exports, falling foreign exchange reserves, a
depreciating currency and slowdown in investment activity over and above
the budgetary overruns and current account deficit. Keeping these
challenges in view, the country needs to develop an economic policy
which can absorb unexpected upheavals. Unfortunately since the inception
of Pakistan our economy has never been stable except a few patches,
mainly due to inherent weaknesses and world economic developments. With
rising oil prices and warnings of world food shortages, a horrible
scenario is emerging and it is feared by international economic and food
experts that food shortages and higher prices could cause upheavals. In
this perspective, word of advice from the State Bank Governor deserves
serious consideration by the economic managers of the new Government. At
least the economic team can devise a farmer’s friendly policy to
encourage maximum utilization of our fertile land for achieving
self-sufficiency in food. If the prices of fertilizer and pesticides are
brought down, the present procurement prices of various agricultural
commodities give enough incentive to the tillers to boost production.
The Government must also take harsh decisions to end smuggling,
discourage import of luxury items and promote the culture of austerity
and simplicity in the society. The Government must therefore start a
dialogue with the business and other stakeholders to write a new social
contract with the objective of introducing a comprehensive package of
imaginative reforms to stabilize the economy in a way to absorb
unforeseen shocks. |
