Good move for the economy
IT is our thinking that there are institutions that to prevent us from developing but at the same time we should see that countries like Hong Kong, Singapore, Korea, Taiwan have borrowed from institutions like World Bank, ASEAN Development Bank and International Monetary Fund.
But there is something to see and understand.These countries used their loans to grow their economies.
So it took them very little time to stabilize themselves.Similarly, if you have the same determination as these countries, you too can see excellent performance.
It is a basic rule that if you take a loan from anyone, you have to repay it on time.Let me explain my point here with an example.
If you have taken a loan of 100 Million dollars and the cost of this loan is 5% interest.This loan will now prove to be profitable for you only if it earns you more than the value of the loan.
That way you will have two benefits from this loan.The first is the value of your loan, the second is the significant increase in your wealth.Let’s take a look at this example of your country’s economy for a moment.
Circumstances will look different.We have been borrowing but we are taking a new loan to pay off the previous debt.As a result, we don’t build wealth.We were also counted in developing countries in the first 5 years.
Our main issues are the management and governance of the country.That is what we have Nigeria on one side of the world and we have Pakistan post 1990.
In the first 40 years, the World Bank helped us in developing the whole country to grow at 6 and 6.5% same country different governance and structures.So by raising this point, we are not doing any justice to our own institutions.
We are not fundamentally differentiating between responsible, well-governed states that have used these resources and developed themselves.The current government seems quite serious about economic issues.
This can be witnessed from various things.When the Prime Minister in the last few days formally announced public relief package, in which reduction in petrol and electricity prices was announced.Increased the amount of awareness program for the poor.
As well as announced internships for youth employment with compensation.One of the commendable measures was the amnesty scheme.This time, linking amnesty to the industrial setup would be a good move.
But one thing we have to see is that this amnesty is limited to the export sector.It should not be extended to the import sector.At the moment our current account deficit is growing very fast.
And amnesty from the import sector would mean setting up a new import industry – which at the moment could not afford our import bill.
At the same time, we need to be flexible in our policies.Especially within the policies that you make for an investor.To have confidence in it and to convince any investor to keep their policies long term.
This is very important for investor confidence and for generating resources in your economy for easy business and for your economy to collect taxes for employment.
Needless to say, the world has gone through a lot of catastrophes in the last few years.Disasters like COVID topped the list.
COVID has devastated the economies of many of the world’s great nations, as well as human lives.
Our country has also fallen victim to this.Because our country is more dependent on imports, which has turned the wheel of our country’s economy.
After the war between Russia and Ukraine, due to rising oil prices in the world market, our country’s trade deficit has increased.
On average, if even 10 dollar changes, the burden of up to Rupee 2 billion falls on the import bill.In order to reduce the trade deficit, we need to make import substitutes.
Many of our sectors are devoid of investment.We are importing petrochemicals.Deep refineries are importing oil.
We have to look at all these import alternatives on an emergency basis.On the other hand, we have to take emergency measures to reduce our revolving debts.
Needless to say, our revolving credit is growing.The devaluation of our rupee is also playing a big role in this.Our rupee has depreciated by an average of 30%.
On the other hand, we did not see any clear terminology in the energy sector, which is another reason for the rise of revolving loans.
At the same time, the average electricity prices have increased by 30% in the last three years.
The government, however, did revisit the contracts with the former independent power producers, which led to savings in capacity payments.
The government also gave some money to independent power producers with new conditions.
However, revolving loans did not decrease.To date, we have not been able to formulate any consensus on energy policies.
Whenever a government makes a non-popular decision, the opposition parties take a different turn.
The second biggest problem is pricing.If we look at the tariff, there is a big difference between your local gas and international gas prices.
We need to deregulate the market and bring in new investors so that foreign direct investment can grow within your country.
We can work on our fiscal side, because the fiscal side is always easy.The steps we’ve taken to overcome the fiscal side could be further improved.
We can tax wealth.We have to impose taxes on the rich class instead of imposing an additional tax of Rs.350 billion on the common man.
We need to think seriously about how long we will spend our income on indirect taxes.
We as a nation have to think about how long we will continue to go to Saudi Arabia, sometimes to China and sometimes to the International Monetary Fund.
We have to stop somewhere.One of the basic principles of the world is that unless there is income tax in the society then there will be no justice in the society.
So we have to think now and come up with a serious strategy to become an independent country—The writer is economic analyst.
