Despite having tremendous economic resources of hardworking and talented youth, natural resources of water, agriculture, skilled manpower, Pakistan has turned into a heavily indebted country due to the lack of prudent policies and ineffective implementation. The public sector cannot survive without foreign loans.  

Adam Smith, a great economist was the first to realise that the Wealth of a Nation was neither in the accumulation of commodities nor in the resource reserves that a nation may happen to possess, rather wealth exists in the productive knowledge of its people. The ability to efficiently transform resources (factor inputs) into desired goods and services represents the true source of a nation’s wealth.

Pakistan’s foreign domestic debt liabilities are going up, and according to published reports, Pakistan’s external debt rose to $74.8 billion in July-December FY 2021 from $70.3 billion a year earlier. Long-term foreign debt stood at $73.9 billion at December-end, up from $68.7 billion until June-end. It amounted to $68.1 billion a year earlier. In November 2020 alone, it was forced to borrow $1.1billion from commercial lands pushing up the total debt flows in the first five months of the current fiscal to $4.1 billion. According to official resources of the Ministry of Economic Affairs, the new debt inflows so far constitute 37 per cent of the annual budget estimate of the foreign borrowings of $12.4 billion for the entire financial year.

In the latest forecast of IMF in April 2021, it says that Pakistan’s general gross debt would peak at 87.7 per cent of GDP; which is the highest in history.

Quoting a shining example, China has reportedly set its 2021 economic growth target at more than 6 per cent, Premier Li Keqiang said in his annual work report recently. Chinese leaders announced that the world’s second-largest economy intends to keep consumer price inflation at around 3 per cent and seeks a budget deficit goal of about 3.2 per cent of GDP. The government also aims for an urban unemployment rate of approximately 5.5 per cent and plans to create more than 11 million new urban jobs, as quoted by National Bureau of Statistics of China.

Economic policies’ rationalisation and effective implementation

Our national economic policies makers must go for real economic growth policies. It is highly imperative to plan national policies aiming at enhancing agricultural and industrial productivity, which ensures higher per area yields, high production levels in industries with better policies. Unfortunately, we have come to a stage where we are importing wheat, sugar and other commodities. Our exports of industries have dropped considerably now; major reasons are loss of competitive edge. The industries are not coming up to compete the international market due to lack of up gradation of industrial processes and international challenges and better practices. Policies’ implementation plans high production planning and achievement in key to surviving national economy. Implementation failure is a real bottleneck in effective actions on policies much due to lack of management skill to see effective results. In this connection, Peter Drucker, a global expert in management practices has devoid PDCA cycle, which follows the case of all management practices and effective results. This cycle stands as P for planning, D for doing or implementation, C for checking the same, and A stands for actions to correct implementation. This formula is very effective in implementing policies without which goal results cannot be achieved, and our debt mitigation policies cannot give effective results unless globally proven practices are followed.

(The writer is former adviser to Federal Inspection Commission of Pakistan. Chairman Standing Committee Lahore Chamber of Commerce & Industry)

Mian Fazal Ahmad