Syed Hamzah Saleem Gilani
Present regime inherited a chronically sick economy with multi-dimensional issues. A quick glance at the diseased economy reveals that debt liabilities had risen to a level where major portion of the budget was being eaten up by debt servicing. Fiscal deficit was inflated and foreign reserves had depleted to a point which were only sufficient to finance imports for two months. There were structural weaknesses in the system awaiting rectification for decades.
Correcting the economy could not have been purely on the principles of economics rather some stern, and unpopular, administrative steps had to be taken to spring out of this quagmire. To resolve Macro Economic stability the Government has catalyzed significant international financial support. Sustainable and balanced economic growth is inevitable for economic development. In order to achieve this objective the Government has entered in to $6 billion worth program with IMF, spread over three years. This program will also open new vistas for Pakistan in the international market.
Documentation of economy and implementation of a strict tax regime, especially with reference to General Sales Tax (GST) will surely serve as a panacea to the ailing economy of Pakistan.
A generous amnesty scheme was launched which has increased the tax filers by 69% and contributed a hefty sum of 65 billion rupees towards the economy of the country. Proper invoicing and collection of GST is the most winning factor of the recent initiatives to improve economy. Benefits of G.S.T collection will start surfacing in approximately two to three years however the country is now on the right economic pathway.
Economic reforms have tamed the Current Account deficit which has dropped from 6.3 of G.D.P to 4.8% GDP in FY 2019. Trade deficit has narrowed by 11.5% and our foreign reserves are at the level of $ 7.3 billion, enough to cover 1.7 months of imports.
Major challenges for Pakistan’s economy are low level domestic savings. Presently Pakistan is saving 14% of its production whereas in India rate is 38% and in China it is 50%. Essentially Pakistan needs to double its savings rate.
Inflation has risen from 3.9% (FY 2018) to 7.3% (FY 2019), primarily because of rupee-devaluation and increased oil prices in the international market.
Water and power shortages have seriously hampered the agricultural and industrial growth in the country. Growth of agriculture has deflated from 3.9% to 0.8% whereas industrial growth has declined from 4.9% to 1.4%.
Political uncertainty has translated in to flight of capital and low level of investments. Investors are considering other countries as an option to get better returns for their investments.
There is no quick fix to effectively manage economic stability, however there are proven remedies to heal the wounded economy. National psyche needs to be changed where the citizenry, in order to make them a productive Human Capital, rather than being in a state of depression, should be inculcated to become contributors towards economic progression. Use of technology and advanced modes of communication can surely facilitate the businesses to rapidly progress. Youth is an asset to any country; they need to be mobilized, given incentives and should be made positive contributors towards economy.
Improvement in Governance, Devolution of powers and decentralization are essential for the progress of any country.
Imran Khan has shared his vision with the people and quite often addressed the issues discussed above. The country is on the right track and we can hope that in the days ahead we see a flourishing and prosperous Pakistan.
— A freelance writer
