IN THE wake of financial difficulties all over countries, an accord is working for the need of new models to lead social orders onto a way of sustainable economic development. In this setting Sustainable Development Policy Institute (SDPI) in collaboration with Friedrich-Ebert-Stiftung (FES) held Economy of Tomorrow (EOT) meeting by uniting economic scholars to exchange thoughts for working up the schematics of a economic model for a socially comprehensive, monetarily sustainable development to create conditions for a decent society with full capacities for all, and in addition recommend ways and intends to advance a strategy for the recently required improvement way.
We can either go back-pedal to the IMF (International Monetary Fund) for confronting intense financial and non-economic conditions or advance accord among every single political party for undertaking the way of self-reliance, Dr. Hafiz Pasha, a distinguished economist, stressed while giving a view of the year 2017 in the meeting.
He emphasized that it’s important to note that the country was heading towards ‘incipient financial crisis’, which would be altogether different this time contrasted with 2008-9 and 2012-13 crisis. It is yet huge to understand that the previous two stuns that Pakistan faced were after effect of sudden stuns and inconceivably high increment in the oil prices. In any case, the emergency that Pakistan is liable to face sooner will be the result of structural factors affecting on the economy. There are genuine symptoms of structural issues like diminishing exports, contracting tax base, and complete failure of governance in public sector enterprises (PSEs) e.g., Pakistan International Airlines (PIA), Pakistan Railways, and others.
The issue of state capture by the extravagant elites of Pakistan which followed by failure of the government were also talk of the meeting. During the meeting, Dr. Pasha further emphasized on the ‘elite capture’ that was very obvious as the tax revenues are incurring losses of Rs. 3,500 billion simply because of incentives, tax cuts and tax being evaded.
Dr. Pasha added that the move to devalue rupee against dollar was planned to satisfy the IMF as it may prepare for taking advances from World Bank and Asian Development Bank speedier. It is indeed a matter of concern not to let net international reserves diminish by more than $10 billion by June 2018 as alone $150 million has gone out from foreign currency accounts, for which there is a dire need not to keep fiddling with external accounts anymore.
How inclusive will CPEC be for the growth of our economy in the coming years, is what also remained the major part of the debate during the meeting. Talking about the CPEC interventions, Dr. Aliya Khan gave audience the question to think about as to what CPEC will be doing for the huge youth bulge of the country along with how it helps improve the unbalanced regional development of the nation.
Moreover, there was a general consent for a need to sit together to devise a monetary program for which Dr. Aliya emphasized the use of available resources and statistics to create an economic agenda.
Proposing the foundation to redesign organizations, former economic advisor ministry of finance, Sakib Sherani, said absence of institutional changes made overwhelming misfortunes the economy as export to GDP proportion has declined. He further added that governance is enacted via institutional framework. However, there is little or no mention of institutional development in almost all political manifestos. “A robust institutional framework ensures a responsive, responsible, competent, accountable system of political and economic governance”, emphasized Mr. Sherani.
Providing the view of provincial economy of Punjab, Dr. Nadia Tahir, Director Research Lahore Chamber of Commerce & Industry shared some of the most important result of her study that Lahore (alone) has a large economy of over a trillion rupees while its contribution to federal revenue is 15.1 per cent. Lahore’s contribution to income and employment is also the second largest and its annual GDP growth rate was higher than that of Punjab and rest of Pakistan. However she emphasized that a shift from manufacturing to the services sector has been the most notable feature of urban growth.
Discussing the KP region, Dr. Muhammad Rafiq discussed some strengths, potentials and weaknesses of the region. More autonomy has been given to the provincial government to manage its affairs after18th amendment along with increased urbanization that has led to greater public & private investment in urban amenities along with its potential of producing 25,000MW of electricity through hydel power.
On the Pakistan-China Joint Cooperation Committee (JCC) meeting of CPEC, Dr. Vaqar Ahmed, Deputy Executive Director SDPI, also informed that the most notable loss during this meeting is the reduced interest of China in prioritizing Special Economic Zones (SEZs). Balochistan which requires SEZ the most was not helped by the federal government towards feasibility preparation. Hence no SEZ for Balochistan has been prioritized under CPEC for the time being.
Giving the perspective of economy of tomorrow, Dr. Vaqar, highlighted that the economy in 2018 will be facing multifarious issues as the country’s borrowing requirements will increase to meet the government’s expenditure, including circular debt that was expanding on account of energy sector inefficiencies. He further said that the year 2017 was also a year of missed reform opportunities. Besides, it became more difficult for businesses particularly small and medium enterprises (SMEs) to do business in Pakistan.
—The author is associated with Sustainable Development Policy Institute, Islamabad