You need a plan

Wednesday, Oct 13, 2021

This refers to the article ‘Economy 2021’ (October 6) by Dr Abid Qaiyum Suleri. The writer blames external factors for the country’s predicament. However, external adversities are not unique to Pakistan. Other countries in the region are equally impacted by them. The article does not highlight the blunders of our policymakers, including detrimental policies perceived as having been made to benefit influential groups within and outside the country. The economy is facing two key challenges – large trade and fiscal deficits.

The former is causing a current account deficit. The trade gap can be reduced by increasing exports or reducing imports. Pakistan’s exports cannot increase significantly due to a lack of sufficient export surplus. Stopping the import of luxury and unnecessary consumer goods by an executive order is a quick and effective fix to bring down the import bill. Only a cynical policymaker would consider the surge in sales of cars and sprouting up of housing societies across the country supported by amnesty schemes a prudent development model. The budget deficit for the fiscal year 2021-22 is over Rs3 trillion, and the government has planned to finance by borrowing. Ruthless austerity is needed in the current expenditure of the government. It is unwise to raise pay or pensions of government employees while the national exchequer is empty. Policymakers can consider further measures to build a self-reliant economy like banning the operations of exchange companies to control the outflow of illegal capital, revisiting imports under the gift scheme by overseas Pakistanis. Moreover, unproductive schemes to gain political mileage should be discontinued and resources diverted towards critical development projects. Without implementing a set of sweeping measures, the economy faces a bleak future.

Arif Majeed