By Ayesha Mudassar

ISLAMABAD, Aug 22 (INP-WealthPK): Experts believe Pakistan’s major economic problems stem from its fattening import bill needing a serious evaluation of the current economic structure that is not functioning well.

Talking to WealthPK about the state of economy, former economic adviser to the government and Dean National University of Science and Technology (NUST) Dr. Ashfaque Hasan Khan said concrete steps were needed to curb the country's persistent trade deficit.

“There is an urgent need to adopt an aggressive yet selective import compression policy. Banning the import of non-essential goods to preserve the country's foreign exchange reserves is a good step to start with,” he said.

Dr. Ashfaque said export diversification, revival of sick industrial units, and expansion in the import-substitution industries was the need of the hour.

According to the data released by the Pakistan Bureau of Statistics (PBS), trade deficit jumped to $48.38 billion in Fiscal Year 2021-22 (FY22) compared to $31.07 billion recorded during the FY2020-21, showing an increase of 17.2%.

The second most significant obstacle to growth is the low investment in human development.

Dr. Mahmood Khalid, research economist at the Pakistan Institute of Development Economics (PIDE), told WealthPk that development in human resources was not encouraging in Pakistan adding that there was a vast difference between the knowledge produced and the knowledge needed.

“Through the process, the society augments the skills, education, and productive abilities of its people. Careful formulation and implementation of the human development process encourage economic expansion in the country.”

Pakistan ranked 154th among 189 countries on the UN’s Human Development Index (HDI) 2020.

The third most significant problem is ‘fiscal deficit’ which implies the expenditure of the government exceeds its revenue in a year. Pakistan registered a record federal budget deficit of nearly Rs5.5 trillion in the last fiscal year 2022, exceeding the annual target by a wide margin of Rs1.1 trillion due to imprudent fiscal policies.

Fiscal discipline needs to be strictly followed and all additional expenditures will be entirely financed by tax measures.

The economic uncertainty in Pakistan has dented both local and foreign investors' confidence. Investors, trade, and the business community are withdrawing their investments out of the country in the prevailing circumstances.

According to the figures released by the State Bank, Pakistan’s foreign investment fell year-on-year by 61% in 2021-22.

The major economic challenges are heavy external and domestic indebtedness, massive outflow of money, rising poverty and unemployment, high fiscal deficit, and low investment.

Credit: Independent News Pakistan-WealthPk