LAHORE - “Even before the pandemic, Pakistan had 60 million unemployed. COVID 19 has added an estimated 20 million more,” said former Finance Minister Sartaj Aziz while speaking at an online conference arranged by the Institute for Policy Reforms on Wednesday.
In his comments, Humayun Akhtar Khan said, “We have pursued stability for decades with no success. We should now think in terms of growth and exports”. It is no surprise that economic reforms move one step forward and two steps back.
Sartaj Aziz said that there should be a comprehensive Corona Revival Plan. He said agriculture needed especial attention because it is the economy’s backbone. He highlighted the need for a water policy and better water management. The textile sector was dependent on cotton. “And we must have policies and incentives to move to higher end farm products.”
He said that high interest rates harm the economy. SMEs are important. They employ a large number of people. SMEs must get more credit. As yet, government has not announced support for the informal sector, small vendors, and traders. They have a large share in the GDP and must get support
Humayun Khan said that the budget is important if it is part of a larger strategy of growth. “Fifty years of focus on stability and austerity has left us with no strategy for growth”. He urged that the coming budget must put people and health workers first. Also, it must support businesses. Firms large and small must stay alive. There is a global recession and liquidity squeeze. Yet there is no national debate on health and economic issues.
Savings and investment have fallen, with exports down 4% up to April 2020. Interest rate was kept high to attract ‘hot money’, which disappeared at the first sign of rate correction. He said economic recovery is not possible without putting the health challenge behind. The other priorities he listed are help to those who have lost jobs and concessional financing and liberal support for businesses. GoP will have to do so while keeping within the tolerance level of IMF targets, he said.
CEO Pakistan Business Council, Ehsan Malik said that COVID is an opportunity to revisit economic policy making and develop a national economic plan with broad consensus. Government must prioritize welfare of the common man with food and basic supplies and services. Dr. Zubair Khan reminded that the economy was already doing poorly, even before the pandemic. Fiscal deficit was high, the high interest and exchange rates had no economic logic.
He said that macroeconomic issues largely stayed unattended, with no fiscal adjustment. Eminent expert and LUMS Professor Dr. Bari said that reforms are needed at the micro level, whereas the policy space focuses on the macro. We must rethink the role of government so that they have greater role in education and health service to the people.