By Abdul Wajid Khan

ISLAMABAD, August 2 (INP-WealthPK): The government has been advised to adopt long-term solutions based on structural reforms, especially in the fiscal sector, and diversify exports to steer the economy out of the boom-and-bust cycle for sustainable growth.

Talking to WealthPK, noted economic expert and Associate Professor at the Pakistan Institute of Development Economics (PIDE), Dr. Nasir Iqbal said that despite some positive news on likely resumption of the IMF programme, the economic situation was still not well because prevailing uncertainties were adding to economic woes.

He said as a way forward, the government should focus on political stability along with taking concrete measures to ensure smooth sealing of the IMF programme.

Furthermore, he added the government needed to convince friendly countries to extend support.

Finance Minister Miftah Ismail has said the pressure on the rupee will vanish in a couple of weeks. “Imports in Pakistan as of July 25 were $3.758 billion. At this clip, our total imports are likely to be $4.824 billion. This number will be InshaAllah less than our exports plus remittances,” he said.

To a question about how to end the boom-and-bust cycle to lead the economy toward balanced growth, Dr. Nasir Iqbal suggested that the government devise a long-term solution based on structural reforms, especially in fiscal sector, to increase tax revenue, while it should also take steps to diversify exports.

According to the latest official data, the merchandise exports during the financial year 2021-22 were recorded at $31.792 billion compared to $25.304 billion during the financial year 2020-21.

On the other hand, the merchandize imports went up by 42.21% from $56.380 billion in financial year 2020-21 to $80.177 billion in financial year 2021-22.

The huge trade deficit of around $48 billion has created a severe balance of payment crisis. Pakistan needs significant increase in its exports to balance the trade to ease pressure on the rupee.

Analysts said that diversification and improvement in quality of exportable products can fix Pakistan’s current account deficit problem and put the country on the path of sustainable and inclusive economic development.

A World Bank report about revival of Pakistan’s exports says that strengthening exports is critical for the country’s sustained economic growth. It says a more sustainable way of addressing trade deficit challenge is boosting exports.

Pakistan direly needs increasing its focus on merchandise export diversification for revival and strengthening exports.

Although, the government is already taking steps for export diversification with respect to market, the diversification of products is more imperative to increase the list and varieties of exportable goods and services.

The World Bank report also highlights that the quality of Pakistan’s export products is another indicator of export competitiveness. If exporters specialise in high-quality segments of the market, they can create more value-added and better paid jobs. There is substantial scope for value addition in agricultural exports through, for example, branding, compliance with standards and appropriate certification.

During his interview with WealthPK, Dr. Nasir Iqbal of PIDE maintained that given the fragile economic situation, the government should focus more on adopting pro-poor policies to save 60 million people, who are living below the poverty line.

He underlined that the government must expand direct support to vulnerable segments of society. He said the central government should join hands with the provincial governments to design and execute well-directed social protection policies.

He also suggested that climate change should be considered while devising social policies because according to the World Bank, climate change is deeply intertwined with global patterns of inequality and the most vulnerable people bear the brunt of climate change impacts yet contribute the least to the crisis.

He said as the impacts of climate change mount, millions of vulnerable people face disproportionate challenges in terms of extreme events, health effects, food security, livelihood security, water security and cultural identity.

Independent News Pakistan—Wealthpk