Speakers Highlight Pakistan’s Economic Challenges at Public Debate

Thu Feb 22 2024
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ISLAMABAD: Speakers at a public debate on Wednesday highlighted the significant economic challenges that Pakistan is currently facing, fostered by both internal and external factors.

They were speaking at an event organized by the Centre for Strategic Perspectives (CSP) at the Institute of Strategic Studies Islamabad (ISSI), on “Stabilizing Pakistan’s Economy.”

Mueen Afzal, Former Secretary General, Ministry of Finance and Economic Affairs, was the Guest Speaker at the event.

During his address, he threw light on the recent challenges confronted by the Pakistani economy. He attributed the country’s economic issues to the misallocation of human resources.

Afzal stressed that economic crises requires a rigorous reform process. He highlighted the potential benefits of investments like CPEC, adding that they must be utilized sensibly. He argued that stabilizing the economy relies on achieving sustainable growth, necessitating a minimum GDP growth rate of around 5%.

He stressed the need to fight poverty and inequality through fiscal discipline; responsible management of debt; increasing savings and revenues; trade diversification; structural reforms; conducive environment for FDI and, above all, ‘sensible decisions.’

Former Secretary General added that the foremost concern for Pakistan currently is the rising inflation, which impacts both exchange rates and interest rates.

Afzal also talked about the recurring challenge of the balance of payments, stressing a strategic focus on trade policies and diversification of exports as main solutions.

He went on to say a manageable current account balance is crucial for maintaining a stable rupee, a prerequisite for sustainable growth.

In conclusion, he noted that Pakistan’s public spending is limited, below 20% adding that this limitation hampers investment in public infrastructure, further worsening inequality within the society.

Pakistan’s economy faces severe macroeconomic imbalances

Dr. Neelum Nigar, Director CSP, in her remarks said, the economy of the country has faced severe macroeconomic imbalances, with the recurring balance of payments crises, shortages of foreign exchange, and lot of fiscal indiscipline.

She said the economy has not been able to improve despite the series of financial stimuli provided by international financial institutions. This underscores the need to understand the fundamental aspects of the economy.

DG ISSI Ambassador Sohail Mahmood in his welcome remarks, highlighted the significant economic challenges to Pakistan.

He added the impact of global economic slow-down, food and fuel crises in the wake of Russia-Ukraine conflict, Covid-19 pandemic, and situation in the Middle East have impacted the economy of Pakistan a lot.

He noted that Pakistan is dealing with a dual deficit challenge, involving both fiscal and current accounts, ultimately leading to a debt trap.

He added the economy of the country is also confronted with rising inflation, energy crisis, food insecurity and unemployment, adding to the already formidable set of challenges.

These problems have hindered the country’s path to achieving sustainable growth. Ambassador Sohail Mahmood further said that the implementation of basic corrective measures, including redirection of resources toward social sectors, has been delayed by fiscal constraints.

After the presentations, participants engaged in an interactive session. The event concluded with a vote of thanks by Ambassador Khalid Mahmood, Chairman of the Board of Governors at ISSI.

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