FINANCE Minister Muhammad Aurangzeb, who is spearheading the process of reforms aimed at bringing the economy back on track, has talked about the need to rationalize the Government spending and hoped that foundations of macroeconomic stability would be moved towards growth trajectory in 2025. He said macroeconomic stability had been achieved and it was confirmed by independent sources, as inflation and policy rate have receded, foreign exchange reserves improved and the currency remains stable.
The Minister has established his credentials as a deliverer and therefore, one can expect that the economic team of the Government will succeed in building a momentum for growth in the New Year. However, we have been emphasizing in these columns that investment and growth are intrinsically linked to the cost of doing business, which has not yet come down meaningfully except for encouraging cuts in the policy rate. The Minister has referred to the increased consumption of cement and fertilizer to substantiate his point that the economy will move toward growth trajectory but the process could have been accelerated if instead of taxing it heavily the Government provides incentives to the real estate sector in the backdrop of phenomenal increase in the prices of building material. There is definitely a need to check wasteful expenditure of the Government as tax-payers’ money must be used judiciously but this should not mean closure of important institutions or slashing their budgets on the plea that the funds are being used for payment of salaries and pensions alone. Success stories of developed economies tell us that they achieved glory on the strength of higher education and research and development. Pakistan is one of the countries spending nominally on R&D (0.16%) against the global average of 2% and the desired investment of 10 to 20% of the GDP but now the Minister is hinting at wounding up about 80% of research institutions. In fact, we must increase allocations for research and development and shortcomings, if any, may be removed through better management and reforms. Similarly, there is no justification to lower funds of the HEC on the basis of quality of education by institutions of higher learning. The HEC initiated revolutionary programmes during the tenure of Dr. Attaur Rehman, who laid firm foundations for growth of IT and telecom sector as well as engineering and technology. The private sector has a role to play in economic development but here in Pakistan this has led to cartelization. Instead of privatizing or closing down important institutions, ways and means should be found to ensure their working on optimum level.
