By Muhammad Soban

ISLAMABAD, July 22: At a time when Pakistan is facing the most difficult economic situation in its history, experts have recommended that it should revamp the entire approach to tackle the crisis. Pakistani rupee has further nose-dived against the dollar, and experts are predicting that this crisis may further deepen in the coming days.

There are multiple reasons which can be attributed to the current crisis. Pakistan has the problem of foreign reserves as our imports are far greater than exports. Fiscal deficit is another factor where government expenditures exceed revenue. Unproductive subsidies, loss-making state-owned enterprises (SOEs), pension bill, and the circular debt of the energy sector are putting massive burden on our economy.

Dr. Atif Mian, a famous Pakistani economist based in the United States, told WealthPK that the first and the most critical measure in the current scenario is the revival of the IMF (International Monetary Fund) program. Pakistan has made a staff-level agreement with IMF, but still, there is a delay in getting loans. Getting a loan would help ease the pressure on the exchange rate.

Dr. Atif stated that Pakistan needed a grand political bargain.

“Pakistan needs to find that common space that every functioning society needs. There is a need for political stability in the country, which plays a role in the decision-making of investors,” he said.

Pakistani imports are growing more than the growth in exports. Pakistan has to curtail its imports to lessen trade deficit. Dr. Atif said the elite capture of the economy is particularly pernicious and unproductive in the case of Pakistan.

“The powerful are knee-deep in unproductive, rent-seeking sectors like real estate and sugar. That must change. The taxation and incentive structure must favour productive activities over unproductive ones, and the economy must open up to women,” he said.

Public policy expert Dr. Mahmood Khalid told WealthPK that Pakistan must learn from Bangladesh and immediately ban unnecessary imports.

He added that there are some imports like edible oil and other necessities which can’t be banned.

“However, luxury items, like cars and expensive mobile phones, must be banned,” he suggested.

Credits: INP-WealthPk