View Full Version : Handling Pakistanís economic challenges - Col (R) Muhammad Hanif - 16 May 2019

16th May 2019, 01:30 PM
The PTI government is confronted with many challenges, especially the handling of the inherited debt ridden economy. In this context, the government has been working to make an economic revival plan mainly focused on stabilizing the value of rupee, to increase exports and take other measures to increase the foreign exchange reserves, to muster sufficient funds to repay the foreign loans and resolve the balance of payments issue, and to collect targeted tax revenues to prepare the upcoming annual budget. In this regard, the recent shuffle in the cabinet made by the Prime Minister has initiated the domestic debate and the opposition parties have started increasing pressure on the government.

To ensure political stability and handle major economic challenges by the government, following are important. It is necessary for the country to avoid political instability at this stage for which all political stakeholders need to cooperate to revive the economy on priority basis by making the relevant laws in the parliament. In this regard, the government may have to carry out a balancing act of taking all the stakeholders on board by convincing them that the ongoing accountability process was not a political victimization. For this purpose, the accountability process needs to be made more transparent.

The government and the opposition parties should work together on building the investorís confidence by giving out their intent that keeping political stability in the country and reviving the Pakistanís economy was in their common interest. In this regard, avoiding confrontational statements in the political and economic fields is necessary. For creating foreign investorís confidence about the prospects of the revival of Pakistanís economy, the positive impact of the Belt and Road initiative, and the CPEC, on Pakistanís economy should be projected.

There is also a need that Pakistanís diplomatic efforts to strengthen its relations with important countries in the Middle East and the world should be highlighted. For building confidence of the domestic audience, Pakistanís role in performing the balancing act between Iran and KSA also needs to be projected by the government functionaries and the media houses. In this context, it is important that the people of Pakistan understand that in the evolving international political environment, all states tend to develop de-hyphenated relations with other states.

Domestically Pakistan has cracked down on terrorist organizations and as a recognition of its sacrifices in fighting the war on terror, it deserves to be given a relief by the IFIs and FATF

For example, Iran has good relations with India, and Pakistan has no objections to that as far as Pakistan-Iran relations grow to benefit both countries. Similarly, KSA is growing relations with Pakistan as well as with India and Pakistanhas never objected to that. While Pakistan-US relations are converging for a lasting peace in Afghanistan, Pakistan has strengthened its relations with China (through CPEC) and the developed intimate relations with Russia. Likewise, whereas India remains an active member of BRICS, and SCO, it is also a member of the US sponsored Indo-Pacific grouping (a forum built against China and Russia).

The Pakistan government should also convince the concerned countries that it has suffered tremendously in the war against terror and helped international community in stemming the tide of terror in the region. Domestically Pakistan has cracked down on terrorist organizations and as a recognition of its sacrifices in fighting the war on terror, it deserves to be given a relief by the IFIs and FATF.

It needs to be projected that since the CPEC will allow regional connectivity, and Pakistan will act as a connector of civilization, all international players are welcome to join the CPEC, and Pakistan in its quest for collective economic development and poverty alleviation in the region. In this regard, it is to be highlighted that the Saudi investment in the energy sector and Exxon offshore drilling in Kekra 1 block is a manifestation of Pakistanís offer to the international community to reap the dividends of opportunities generated by strategic connectivity initiative of the CPEC.

Apart from the above suggested measures, it is also highly important for the government to increase its foreign exchange reserves and domestic income by taking immediate decisions and steps to boost Pakistanís economic growth, increase its exports, enhance its foreign remittances from the Pakistani diaspora, and attracting domestic and foreign investment, at the same time controlling the prices of the daily use commodities to keep those affordable to the poor masses and ensuring that no more devaluation of the Pakistani rupee takes place.

In this context, some of the suggested steps to be taken by the government functionaries and other stakeholders are: avoid giving such statements about the economy that disturb investorís confidence and market sentiment; let the business work by facilitating Pakistanís market economy and ensuring provision of energy to the industry and agriculture; take immediate steps to send more manpower abroad, immediately broaden Pakistanís tax base and ensure tax collection, and let the NAB and the courts handle the accountability process and the government functionaries should avoid giving any statements, to avoid political polarization.

The writer is an ex-Army Colonel, a former Research Fellow of Islamabad Policy Research Institute (IPRI), Islamabad and Senior Research Fellow, Strategic Vision Institute, Islamabad