Senior economist says current economic challenges can be effectively addressed

LAHORE: Former Federal Finance Minister Dr Hafeez Pasha asserted that despite enduring challenging economic conditions in the past, the nation managed to navigate through them successfully. He expressed confidence that ongoing economic challenges could similarly be addressed.

Dr Pasha made these remarks while addressing a Conference on the ‘Medium-Term Economic Outlook of Pakistan’ held at the Lahore Chamber of Commerce and Industry (LCCI). LCCI President Kashif Anwar also spoke at the event, highlighting the nation’s current issues and proposing feasible solutions.

Pointing to statistics, Dr Pasha noted that Pakistan’s average GDP growth over the last four years has stagnated at 2.5 percent, aligning with a population increase of 2.5 percent, resulting in negligible improvements in average income.

He acknowledged the economic setbacks caused by the COVID-19 pandemic and natural disasters like floods, underscoring the nation’s resilience in overcoming crises, citing examples from 1971 and 1998. Dr Pasha highlighted a concerning trend where exports have grown by a mere 2 percent annually over the last 15 years, while imports surged by 8 to 9 percent, exacerbating the current account and trade deficits.

Detailing the financial challenges, Dr Pasha revealed that the country’s current account deficit reached $19 billion in the fiscal year 2017-18, with external debt surpassing $130 billion. He emphasized the need for $22 to $25 billion annually for debt management, against State Bank of Pakistan reserves of $8 billion.

Furthermore, Dr Pasha lamented a rise in unemployment from 7 to 10.5 percent, coupled with an increase in poverty from 33% to 45%, leaving 20 million educated youth jobless. LCCI President Kashif Anwar echoed these concerns, particularly highlighting rupee devaluation’s impact on inflation and external debt.

Proposing solutions, Dr Pasha emphasized the imperative of boosting exports and tax revenue, suggesting the reintroduction of schemes like the bonus voucher system from the 1960s to stimulate exports. He advocated for broadening the tax base, including taxing sectors like agriculture and real estate, while also addressing losses in the power sector and considering privatization of struggling state-owned enterprises.

Copyright Business Recorder, 2024