Balance of payments remains biggest challenge for forthcoming government

ISLAMABAD: The biggest economic challenge for the forthcoming Pakistan government is to avert a looming Balance of Payments (BoP) crisis, which threatens the country’s ability to repay debts and stability of its currency, senior economists have said.
“Pakistan’s foreign exchange reserves are falling fast and repayment for debts is increasing. The biggest challenge for the forthcoming government is to protect the balance of payments,” Dr. Ashfaque Hasan Khan, senior economist and Dean at the National University of Science and Technology Business School, told Arab News.
He said the BoP deficit has widened by 43 percent in the last fiscal year and this needs to be addressed urgently to avert further crisis.
Khan suggested the forthcoming government of Imran Khan’s Pakistan Tehreek-e-Insaf (PTI) focuses on resource mobilization through effective tax collection and rationalizes the expenditures to deal with the economic challenges.
“The government will have to set its economic priorities in the first three months,” he said, adding that structural reforms in the Federal Board of Revenue could help to increase revenue collection.
He said the forthcoming government will also have to open up the economy to create more investment opportunities, besides reviewing its options not to knock at the International Monetary Fund’s door for a bailout package.
“The IMF program has already suffocated our economy and businessmen are not ready to invest their capital in the current circumstances,” he said.
In the July 25 polls, PTI has emerged as the single largest party and is ready to form its government in the center, Punjab and Khyber Pakhtunkhwa provinces. The election promises on which the party swung into power include creating millions of jobs, accelerating the country’s potential growth through massive reforms and depoliticizing economic institutions.
According to the United Nations Development Programme’s National Human Development Report launched in May this year, Pakistan is required to generate 1.3 million more jobs annually for the next five years to meet the demand.
Dr. Athar Ahmad, senior economist, said that Pakistan’s budget deficit has grown from 4 to 10 percent of the country’s gross domestic product in the past five years while the foreign exchange reserves have recently declined to around $10 billion.
“The incoming government’s foremost challenge will be to avert the balance of payments crisis as our foreign currency reserves cover less than two months of imports,” he said.
He said that Imran Khan’s government will be able to fulfill its promises of colossal investment on human development through reforms in the education and health sectors only if it “succeeds in increasing the tax base from the current 1.2 million individuals to 30 million.”
The leadership of the PTI, the party in waiting to form the government, is upbeat about meeting the people’s expectations and addressing the country’s economic woes through prudent economic policies.
Azhar Laghari, head of the PTI’s public relations department, said his party has finalized a robust economic policy with the help of economists and will ensure its implementation to steer the country out of the economic crisis.
“The main features of our economic policy include structural reforms in all economic institutions, formulating investors’ friendly policies and spending all the state’s resources on human development,” he told Arab News.
“Our economic policies will spur a rapid growth in the industrial and agricultural sectors, leading to the generation of millions of jobs each year,” he added.