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Debt Mitigation Plan imperative

Debt Mitigation Plan imperative

2017-05-31T02:01:30+05:00 Mian Fazal Ahmad

The Federal Budget 17-18 of Rs 4.753 trillion just announced has provided some positive provisions including enhanced PSDP allocations, relief for the common man, energy sector focus, RandD in technology and export sector growth facilitation. Basically, it is a deficit Budget of 1.479 trillion Rupees based on plan to borrow 38% of the proposed outlay through additional loans. The public sector debt already stands over 70 billion dollars which may further swell. This includes $57.7 bn external debt and Rs 8.6 trillion domestic one.

A Debt Freedom Plan is sine qua non. Out-of-the-box solutions are urgently needed in the budget before its final approval. To be backed by a strong political will, an Experts Advisory Group for Debt Mitigation needs to be set up with the Federal Finance Minister to prepare a necessary reform package on short and long term measures and to oversee effective implementation, otherwise Public Debt freedom will remain a dream for a long time, threatening our political independence. Turkey in a shining example of debt freedom to emulate.

Issues and reforms: It is highly imperative to put the national economy on a high economic growth path in real terms based on actual and advanced productivity trajectory in each sector of the national economy. The following parameters will have to be addressed through massive reforms, coupled with short term and long term action plans free of “babu culture” and with a strong political will at the top to implement them. These factors alone can generate real wealth for the national economy to pay off the current public debt liabilities in a few years and make Pakistan economically self reliant in the very near future.

‘Babu Culture’: This is the core area that eats away the effects of all good policies and plans. Bangladesh, on independence, drastically changed the old complex procedures breeding red-tapism and corruption. Services reforms based on results achievements and market orientation, are needed to meet the challenges of mass welfare, accountability and freedom from corruption. About forty percent of the budget is wasted through red-tapism, delayed and costs escalated projects and corruption. This needs drastic reforms.

Agricultural and industrial productivity growth: This aided with high value addition is the most vital need to add real national wealth. Fast track GDP growth strategies and implementation plans are sine qua non to high growth targets achievements. In this connection, the roles of agricultural and industrial productivity indices are very vital. Presently these parameters are very low in our national economy. This requires necessary reforms package and pragmatic policies to enhance productivity levels in agriculture and industry. The present National Productivity Organisation needs to be strengthened and reorganised professionally. Cost of production needs to be cut through modern technologies. Innovation and technology up-gradation are needed, based on international models. Research and Development plays a massive role in boosting industrial and agricultural productivity.

Mass industrialisation: Aggressive industrialisation policies are needed to be launched in the SME sectors and large industries focusing on exports orientation. PML-N Government in the past launched a rural industrialisation program which needs to be relaunched with updated an approach. This alone would help achieve high growth targets. It would be advisable to set up public sector companies to ensure the fast track implementation of industrialisation programs based on simplified procedures and updated methodologies.

Corruption: Corruption eats away a sizeable chunk of our national resources and adversely effect public welfare policies through red-tapism. It can be checked through reforms and by using intelligence agencies as well. However honest and good political leadership, efficient accountability framework and an effective parliamentary system alone can minimise corruption.

Agricultural Reforms: Agriculture is the mainstay of our economy. On the basis of consultation with all stake holders and agricultural experts, comprehensive agriculture Reforms Policies need to be introduced with the following objectives;

a- To achieve higher per acre yields.

b- To improve quality of agricultural products.

c- To boost exports.

d- To introduce new crops.

e- Farmer empowerment and training.

f- To strengthen the Agriculture Extension Programs to reach the farmers effectively.

Control of wasteful expenditure: A nation gripped by economic crises have to adopt austerity and economical ways to cut wasteful and luxuriant expenses in government and public sector organisations. The number of ministries needs to be cut and reduced to the minimum. International models of developed democracies need to be followed.

Intensifying use of modern technologies: Technology advancements are fast modifying public sector, industrial and agricultural methodologies worldwide. Information and communication technologies are playing a pivotal role. Resultantly higher efficiencies, costs reduction and value addition in operations are being achieved. In Pakistan also, updated technologies, new organisation and management methods and global standards need to be introduced fast to achieve higher national growth in each sector of national economy our public sector. Our R&D organisations have so far failed to achieve market driven and needed results in the absence of public private partnership.

Education and literacy: High literacy rate and education spread at least up to Higher Secondary levels is key to long term growth and strong economy. Enhanced economic resources, allocations for education and Public Private Partnerships in this sector can help boost literacy rates. Economically self-reliant nations today have high literacy rates.

Exports: Pakistan’s current exports levels are going down. Focus should be shifted more on value-added exports especially for the engineering goods and machinery, which has high export potential. Likewise new markets for enhancing exports need to be explored. Defence items can achieve high export targets. With good planning and efforts, Pakistan can achieve an export target of fifty billion US$ per year in a short time.

Overseas Pakistanis: Overseas Pakistanis remittances are well over fifteen billion US$ per year now. In fact, this alone is sustaining the Pak Economy in difficult situations. With good political leadership and a credible system, this can go up. In fact, these remittances can be more productively utilised with a proper institutional framework to strength the national economy.

To work out the details of the reforms packages mentioned earlier, action plans and implementation strategies, a high level experts group comprising experts from the public and private sectors need to be set up the soonest to rid the nation from the ongoing debt trap and save the country from disastrous consequences.

Services reforms based on results achievements and market orientation, are needed to meet the challenges of mass welfare, accountability and freedom from corruption.

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