ISLAMABAD: Caretaker Finance Minister Dr Shamshad Akhtar said on Thursday, that Pakistan’s vulnerability has increased due to an increase in the public debt as well as climate shocks and a lack of innovation and technology.
Speaking at NIPS national seminar titled, “Pakistan’s economic crisis: Challenges and the way forward” held at NUST, Akhtar said that a comprehensive overhaul of the government’s fiscal apparatus is vital to lower the revenue-expenditure gap.
She said that bold reforms would lead to a new era of development and prosperity in the country. She added that effective implementation of ambitious reforms will depend on addressing critical underlying institutional, governance and structural constraints
Economic growth has to be backed by structural reforms: Shamshad
Akhtar further stated that the country’s vulnerability has increased due to an increase in the public debt and persistent breach of Fiscal Responsibility Debt Limitation Act after 2013. She added that large fiscal and trade deficits over two decades have made the country unsustainable with the cost of debt servicing significantly increasing.
She added that the second vulnerability has increased due to climate shocks as moderate weather prediction states that Pakistan’s weather pattern would be even more volatile and lack of innovation and technology is another vulnerability of the country. According to the Finance Ministry’s statement, she highlighted five key areas that have increased the vulnerability of Pakistan’s economy to domestic and global shocks: first, unsustainable fiscal policy due to revenue gaps and unproductive expenditure; second, fiscal unsustainability has enhanced government recourse to public debt which has increased; third, climate shocks as the global warming model predicts that Pakistan’s weather patterns will become even more volatile and extreme in the decades ahead, with an average increase in temperatures by 1.3 percent to 4.9 percent by 2090; fourth, the lack of innovation and diversity in the structure of the economy; and fifth, the failure to integrate Pakistan’s economy with the rest of the world. Dr Shamshad further stressed five critical areas of reforms essential to reducing Pakistan’s vulnerabilities and fostering sustainable growth that included: a comprehensive overhaul of the government’s fiscal apparatus necessary to lower the revenue-expenditure gap; addressing structural weaknesses of SOEs and improving their efficiency and functioning, reducing the debt burden; and enhancing competitiveness and encouraging new investments.
Copyright Business Recorder, 2024
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