ECONOMIC SITUATION NOT STABLE BUT MANAGEABLE
Sep 17 - 23, 2012
Pakistan is currently passing through macroeconomic instability. There is astounding devaluation of rupee, deficit balance of payment, alarming food and non food inflation, high level energy crisis, terrorism, massive illiteracy, continuous decline in foreign investment.
Food inflation is causing a huge increase in prices of edible oil, pulses, rice, milk, sugar, poultry, meat, wheat, wheat flour, fresh vegetables and fruits. Also sky high fuel prices are affecting our both industries and agriculture.
Our domestic savings rate is very low compared with our neighbor India. We have to depend on foreigners to boost our investment rate. In contrast India's high domestic saving rate has enabled high investment rate and high percent annual growth rate of Gross National Product.
Fiscal deficit is a source of macroeconomic instability in our country. Heavy borrowings from the State Bank and rising public debt have created inflationary pressures, giving rise to high interest rates.
Public sector enterprises and corporations like PIA, Railways and Steel Mills have become a major source of burden on the country's exchequer. The tremendous waste, corruption, leakages and losses in these enterprises are adding heavy pressures on the budget.
Economic stability is intimately linked with good governance. In the past Civil Service, Police, Judiciary institutions were functioning smoothly but with the passage of time their performance has gone worst.
The overall governance structure and the strength of institutions determine whether it can achieve the goals that have been set. If the enforcing agencies are saddled with corruption, incompetency, and ineptness there will be a lot of leakages and waste. This is evidenced at present in the case of KESC and WAPDA.
Pakistan offers a profitable market for goods and services. A growing middle class in Pakistan that comprises almost 25 percent of the population with its growing purchasing power creates demand for goods and services.
Pakistan has relatively younger population. 63 percent of Pakistan's population is below the age of 25 and 50 percent is below the age of 19. If properly educated and trained these youth can become asset to our country. They can be utilized fruitfully in the national economic building activities.
Pakistan has close neighbors like India and China who are Giant economies of the world. Peaceful relationship with them can bring benefits to Pakistan's economy through trade, economic cooperation and scientific and investment cooperation. Linking western China with Gwadar Port through railways, highways, pipelines, etc. can be mutually profitable for both the countries. The closer friendly relationship with Gulf and South East Asian can enhance trade and commerce of Pakistan.
Pakistan has one of the largest and well developed irrigation systems in the world. The Indus Basin has boosted Pakistan's agricultural productivity over time. Pakistan is the third largest exporter of rice and is one of the major cotton producer and textile exporter in the global market.
Pakistan's enterprising overseas workers are contributing large amount of remittances to our foreign exchange treasury.
Government should have a firm regulatory framework and a changing environment to help private sector to run these business concerns. By paying taxes to the national exchequer the private sector will contribute largely to the government's finances and losses incurred by the government corporations at present will vanish after privatization.
For a stable economy Pakistan must sets the direction in which the economy should grow. China laid down its 25 year plan in 1980 under the dynamic leadership of Deng Xiaoping. Every succeeding leader followed that plan with certain modification to suit the given circumstances.
Political stability is essential for economic growth. The domestic and foreign investors will avoid investing in that country where there is no political stability. In other parts of the globe, almost 12 per cent of SMEs have been able to evolve into Medium and finally larger organisations.
In our country SMEs should play a greater vital role in economic stability of the country. Already SMEs are somewhat playing a role for the economy as a whole by providing employment and facilitating the transition of the lower income groups into middle and higher incomes.
Pakistani products should be given access to European markets as trade, and not aid, is the best way for Pakistan to ensure economic stability. An early operationalisation of the EU's Autonomous Trade Preferences (ATPs) and Pakistan's inclusion in the GSP+ Scheme is necessary.
Economic growth and stability are the basic objectives of any government. Macroeconomic policies are formulated to achieve these economic objectives: Price stability & Inflation control, Employment, Growth in National Production, Balance of Payment Equilibrium
Political stability must for economic prosperity. Pakistan needed political continuity to become a stronger and respectable state among the comity of the nation. Without political stability and calm order law and condition there cannot be economic stability.
Pakistan has vast natural resources, which are many times more than the oil rich countries of the world but could not be exploited due to the political uncertainty and disruption of the political process.
Huge copper and gold deposits in Balochistan are buried under the vast areas. Thar coal reserves the third largest in the world not being utilized as yet.
In the end it can be safely concluded that the country's economic situation is not somewhat stable but however greatly manageable. In this context it may be mentioned that IMF is ready to help out Pakistan trapped in balance of payment difficulties. Pakistan will have to end its showy luxurious style of living and would have to go under strict austerity measures.