Expert for imposing economic emergency
LAHORE – A senior economist, who is also a former banker, has called for imposition of economic emergency in the country under which import of luxury cars, bullet proof vehicles, fresh and processed foods, cosmetics and other non-essential items should be banned with a view to narrowing the yawning gap between imports and exports.
Talking to The Nation, Muhammad Sharif Chaudhry said the cost of production needs to be reduced for export-oriented industry by lowering down power tariff.
Another possible step urgently needed, he said, is to revoke the legal clauses incorporated in the “Protection of economic reforms Act of June, 1992, which facilitated money laundering and flight of capital for the main purpose of insider trading. SBP surrendered its partial authority of foreign exchange control vested with the Central Bank ever-since the creation of Pakistan.
To overcome the current economic challenges, he said, efforts should be made to draw foreign capital with ongoing development policies linked to Belt and Road if considered viable. Planners in Pakistan have miserably failed to take advantage of home remittances. Overseas Pakistanis remit dollars equivalent to 6 percent of country’s GDP every year. However, the total wages earned by expat Pakistanis are equivalent to 20pc of the GDP but they have not been motivated to invest in Pakistan. “Therefore, overseas Pakistanis should be provided with the requisite facilities, guarantees and reduction in cost of doing business in Pakistan”.
He said the so-called “strong economic and monitory management” claim of the ruling party has proved baseless and Ishaq Dar maneuvered to cover the concealed devaluation of local currency with debts which further burdened the economy during the last four years. He used fudged data to present a rosy picture of the economy. “Latest IMF report indicates more currency slide in the near future because fair and efficient governance system of Pakistani economy is lacking. Gradual erosion of State Bank of Pakistan’s (SBP) authority is the foremost cause of erratic currency fluctuations being witnessed currently”.
He estimated that the country’s foreign debt standing at $72 billion at present would increase by Rs. 360 billion after the concealed devaluation. As imports are more than double the exports, the devaluation would increase the prices of almost all items. If the devaluation is done in a systematic way, the importers and exporters can make adjustments in the international trade in the larger interest of the country. “In case of devaluation in one go, it creates uncertainties and speculations wherein the gains have to be shared by the exporters with their buyers”.
Sharif Chaudhry, who is also central vice-president of the Pakistan Awami Tehreek, said economic benefits could be enormous if focus is shifted to digital economy for establishing innovation-based manufacturing and higher value-added economy.
He regretted that successive governments in Pakistan have not tackled economic challenges seriously. If thorny issues such as privatization, taxation measures, fiscal coordination among centre and provinces are agreed among the main political parties, a consensus based narrative on economic agenda for short, medium and long term period can be built up by decoupling economy from politics. Citing the World Bank report, he said, Pakistan’s population is growing at the rate of 2.5 pc annually. As such, Pakistan can only join the group of high income economies only if the country achieves sustainable GDP growth rate of 8 percent.