The Federal Budget for 2015-16 of 4.089 trillion Rupees announced last year did not prove to be a game changer for boosting real economic growth to rid the country from a debt ridden economy and moving to a “Kashkol” free scenario. Can the next budget planners at the top go off the beaten track and spur real economic growth to boost national wealth? It is not possible without necessary structural reforms to be built in the national Budget.
According to IMF estimate, Pakistan’s external debt would surge to $ 70.2 billions by June 2016. IMF has also predicted Debt GDP ratio to touch 66 percent mark within next few months. At the same time, it has been an encouraging to witness that the present Government has made efforts to turn around the national economy by enlarging the tax base and achieving higher revenue receipts. Nonetheless, heavy dependence on external loans for balancing current account deficit and heavy provisions for continuous debt servicing in the Federal is highly alarming. The Public Sector Development Program (PSDP) largely depends on external loans.
The structural reforms provide the only path to having economic turn around in real terms. Let us glance at the vital imperatives of such Reforms.
The first and foremost package of reforms needed is the elimination of the prevailing ‘baboo culture’ from the bureaucracy and introduce vibrant, progressive, result oriented services reforms based on professionalism and updated knowhow to meet the challenges of the 21st century. Without effective services reforms, the challenges of red-tapism, outmoded approach and consequent losses cannot be overcome. In fact, for example, the currently planned energy projects aimed at overcoming energy crises are not likely to be accomplished in time due to the above mentioned factor of missing services reforms.
A higher productivity growth drive under a well planned Program in the industrial and agricultural sectors is highly imperative to achieve real economic strides. Economic development based on costs and inflationary factors is not a growth in real terms. The National Productivity Organisation of the Govt of Pakistan needs to be restructured on scientific and professional lines to enhance national productivity in vital sectors effectively.
Likewise Technological advancements based on R&D in the agriculture and industrial sectors are sine qua non to higher productivity growth. A well considered National Science & Technology Policy needs to be launched with an action plan strategy & monitoring system. Venture Capital Scheme needs to be launched for R&D and innovative work both in the public and private sectors to launch innovative ventures by our national talent. The Federal Budget should provide for all the above mentioned reforms for effective turn around of the national economy to rid the country from mounting debt.
Research in Universities especially those in the public sector is hardly market driven and is needed to strengthen economic objectives. The proposed National Science & Technology should provide essential guidelines for Universities in this respect.
Exports can play a significant role in strengthening the economy. Falling exports ring alarm bells for our balance of payments position. Pakistan needs to be turned into an export driven economy. The engineering sector can play a leading role in this respect being capital intensive. The latest strides by our Defence organisations by exporting JF17, Alkhalid Tank and other outstanding engineering feats are commendable indeed.
Engineering exports are capital intensive. Like wise, exports of engineering products in the private sector also need to be boosted which can enhance national exports with a quantum leap. However without their up-gradation & modernisation, it may not be possible to make a major breakthrough in this area. Countries like China, South Korea, Taiwan and Malaysia are good examples to follow.
Pakistan has huge shale gas proven reserves & is rated in top ten countries of the World in this field. Concrete plans need to be initiated to explore and exploit these reserves be made in the next budget by allocating funds for feasibility studies & implementation in phases.