Global Rice News

A Nation Striving for Harmony: Pakistan’s Economic Challenges and the Path Forward

In a nation yearning for unity, Pakistan is faced with the urgent need to alleviate political tensions and rally behind a common economic agenda. The people are hopeful that the elected government will demonstrate open-mindedness and inclusivity to bridge divides and foster consensus.

Pakistan finds itself grappling with a host of pressing issues that demand a united front to move forward. Paramount among them is the imperative to craft a robust economic plan that garners widespread acceptance. Additionally, shedding loss-making public sector entities is crucial to alleviate the burden on the national exchequer.

Furthermore, there is a resounding call for an International Monetary Fund (IMF) program that garners support from all political factions. Poverty, unemployment, and social inequality continue to plague the nation, necessitating the allocation of resources that are regrettably scarce.

The stability of prices hinges on curbing inflation, which remains stubbornly high at 29 percent. Of utmost concern is procuring resources for debt servicing, which represents the largest chunk of federal expenditure. Yet, the state finds itself compelled to seek additional loans to manage its affairs, leading to a further escalation in debt servicing expenses. Notably, the hefty markup rate of 22 percent amplifies this predicament.

Continuation of the incumbent caretaker government’s policies could potentially curb the markup rate. The caretaker administration has exhibited courage in making tough choices that their predecessors shied away from. The extended duration of the caretaker period has been beneficial for the democratic setup, as all provincial governments have synchronized their policies with the federal government’s. This consensus has infused the trade and industry sectors with much-needed confidence.

Remarkably, the caretaker government resisted succumbing to the demands of certain industrial sectors for subsidies, despite representatives of these sectors being part of the administration. This is a notable accomplishment.

Thanks to these clear-cut policies, exports have been steadily increasing over the past three months.

No preferential treatment in terms of power or gas concessions has been granted to any sector, and all exporters are required to pay sales tax on inputs, which is subsequently refunded upon export proceeds realization. The caretaker government has remained steadfast in its commitment to revamp the Federal Board of Revenue (FBR) and expedite the privatization process. The paperwork for privatizing Pakistan International Airlines (PIA) is nearly finalized.

However, when the new government assumes power, there will be significant pressure to reverse privatization, halt FBR overhaul initiatives proposed by the Strategic Investors Consultative Forum (SICF), and demand increased subsidies. Furthermore, there will likely be calls for populist measures. The new government may even resist certain IMF conditions.

Economic planners must now acknowledge that when negotiating a new IMF program, it would be imprudent to delay talks in the hope that the IMF might relent or be persuaded. Our experiences over the past five years have revealed that the longer we delay entering into an IMF program, the more stringent the conditions become.

As the elected government takes its reins, it must exercise prudence and patience during the initial two years. Stability and predictability must be restored to the economy. This will require careful budget management for an additional two years, building upon the groundwork laid by the caretaker government and the incoming administration. Only then will the fruits of our labor begin to manifest.

Source: [The News](https://www.thenews.com.pk)