Seminar
Assessing Pakistan’s Economic Plan: Challenges and Opportunities for a Sustainable Future
November 23, 2023
The seminar, attended by esteemed economists, academics, and industry leaders, explored Pakistan’s fiscal challenges and offered strategic, reform-driven solutions for sustainable and resilient economic growth.
About The Event
Marred by economic crisis, Pakistan needs to repay approximately $22-30 billion in external debt in the year 2023. The current economic situation, characterised by surging electricity and fuel prices, depreciating exchange rate, soaring debt burden, widening fiscal and current account deficits, and political instability, has created an environment of uncertainty, thus making it difficult for businesses to plan for the future.
To pull back from this precipice permanently, Pakistan needs a paradigm shift in its economic strategy. Numerous frameworks are available to guide the country in overcoming its present economic challenges. Regardless of the specific roadmap or plan chosen, the key to rescuing Pakistan from its current economic crisis lies in addressing the structural issues within its economy. Achieving a comprehensive economic transformation is essential, and this requires a multifaceted approach involving several measures, such as tax reforms, fiscal discipline, policies to ensure debt sustainability, reforming the monetary and foreign exchange system, and ensuring the viability of state-owned enterprises, among others.
The solution must be centred on specific policies and administrative measures to fix the economy in a sustainable and viable way for the future. However, a grounded solution means administering an extremely bitter pill. The abysmal policies of successive governments and their complacency with kicking the can down to the road have brought the state to a dead end. As in the past, peer pressure problems encaptivated political governments from developing a business plan. However, in the present situation, hard choices are now linked with survival.
Considering the vulnerable economic situation, coupled with a scarcity of foreign exchange reserves, Pakistan needs to repay around US$25 billion annually, on average, for the next three years. Under this abysmal situation, the sustainable management of loss-making State-Owned Enterprises (SOEs) without further burdening the already widening fiscal deficit is a significant challenge. Privatisation of such SOEs might be an option, as it serves two purposes: raising foreign exchange and reducing the budgetary burden of supporting poorly performing, loss-making SOEs. However, the privatisation of SOEs comes with severe political repercussions for the government, creating a situation where political representatives must decide whether to wait for Godot or take the silver bullet. Any solution for economic recovery must be based on cold calculations driven by a cost and benefit analysis. The economic recovery plan should focus on the structural issues rather than harbouring the illusion of vast and untapped resources or that Pakistan’s friends would keep it afloat.
Keeping these considerations in view, the seminar titled, “Assessing Pakistan’s Economic Plan: Challenges and Opportunities for a Sustainable Future” was held to delve deeply into the convoluted economic landscape of Pakistan to rethink its economic strategy. The overarching objective was to gain insights through interaction with academicians and industry experts to explore pathways for sustainable and resilient economic recovery.
Key Takeaways
- Rethinking Resource Management Pakistan’s current economic situation requires progressive – aggressive resource mobilisation and rationalisation of expenditures for economic revival.
- Fiscal Federalism in Pakistan In Pakistan’s economic landscape, structural reforms remain hamstrung due to the overlaps in the functions between federal and provincial governments even after the 18th Amendment. Moreover, provincial governments remain resistant to devolution of power.
- Declining Defence Spending Ratio Apart from flawed macroeconomic policies, a 30 percent increase in pensions and salaries led to a decrease in the defence budget by 15 percent. The current defence spending ratio stands at 1:8 against the neighbouring India, which is considerably less than the ratio of 1:3, a level considered adequate for national defence.
- Dependency on international Loans The excessive dependence on international loans has created a structural imbalance in Pakistan’s economy. Moreover, the rent seeking behaviour has provided space for international actors to influence economic policies in a negative way.
- Efficiency of Bureaucracy Bureaucracy performs a vital role in enforcing accountability and implementation of good governance. However, because of the economic inaptitude and capacity, it lacks the ability to bring a profound transformation in the economic landscape.
Strategic Approach to Privatisation Meticulous and palmary privatisation strategy can unlock the economic potential, reduce the financial burdens, and pave the way for sustainable growth in Pakistan.
Policy Considerations
- Equitable Reforms for Equitable Growth Pakistan needs to act strategically to achieve sustainable, inclusive, and equitable growth moving forward. For such a comprehensive restructuring of Pakistan’s economic architecture, it is pertinent to undertake impoverished oriented equitable reforms.
- Forging Shared Economic Vision To address Pakistan’s economic woes, policymakers must manage economic issues with a state-centric approach to undertake broader reforms. A shared vision, long-term strategies, and collaborative efforts are required to address economic fault lines.
- Self Sufficiency in Defence Budget
Pakistan’s reliance on borrowed money to fulfil defence budget indicates fundamental flaws in Pakistan’s economic trajectory. Self-sufficiency in the military’s budget must remain the top priority, considering the geopolitical imperatives. - Technology as Engine of Growth To revolutionise the economy, Pakistan must embrace technology in all sectors. Moreover, Pakistan can develop an efficient and integrated strategy through technological integration to ensure good governance.
- Economic Diversification Pakistan must diversify its economy through the integration of financial technologies. The fintech cosystem could have a multiplier effect on Pakistan’s economy.
To take independent trajectory in economic decisions, Pakistan needs to formulate an economic strategy focused on the diversification of the economy. - Consistency of Policies and Institutional Revamp To foster Pakistan’s economic resilience, policymakers need to transit away from a narrow narrow-minded approach of reactive policies and solitary remedies. Policy continuation and institutional reforms with state state-centric approach are vital to achieve the desired outcomes. The economic turnaround of Pakistan depends upon its ability to optimize its revenue collection. Fair taxation system, industrial reforms, modernisation of agriculture sectors, investment-led growth, and foreign direct investment can be the key elements of revenue generation strategy.
- Building Fair Tax System
Pakistan must eradicate the concept of ‘non-filer’ from the taxation system. Moreover, imposition of taxes must be based on income instead of taxing a similar percentage on all salaried individuals. - Managing Unsustainable Debt Pakistan must diversify its economy through the integration of financial technologies. The fintech ecosystem could have a multiplier effect on Pakistan’s economy.
- Diverse and Inclusive Decision-Making To reduce international actors’ influence, Pakistan must enhance diversity and inclusivity by bringing academia and industries into the decision-making process.
Post Event Report
A comprehensive report capturing expert analyses, strategic insights, key recommendations, media coverage, and event highlights.
Guest Speakers
Dr Hafiz A Pasha
Economist/ Former Minister/ Dean BNU
Dr Hafiz A Pasha is currently serving as the emeritus professor and has been the former Dean of the School of Liberal Arts and Social Sciences at the Beaconhouse National University, Lahore, and Vice Chairman of the Institute of Public Policy, Lahore. From 2001 to 2007, Dr Pasha was UN Assistant Secretary General and Director of the Regional Bureau for Asia and the Pacific of UNDP. Earlier, he served as the Federal Commerce Minister, Federal Minister for Finance and Economic Affairs, Deputy Chairman/Federal Minister of the Planning Commission, and Education Minister in three governments. Dr Pasha has a MA from Cambridge University, UK and PhD from Stanford University, US. He was awarded in 2005 the Congressional Medal of Achievement by the Philippines Congress. In 2012, he received the Engro Lifetime Achievement Award for excellence in the field of social sciences. He has published over 150 books and articles in the fields of governance, public finance, urban and regional economics, poverty and social development, industry,energy economics, etc.
Dr Mumtaz Anwar Chaudhry
Dean FBEA, Punjab University
Dr Mumtaz Anwar Chaudhry is currently serving as the Dean at PU’s Faculty of Business, Economics & Administrative Sciences. He did his Postdoc in Public Policy from Harvard University (US) and received a PhD in Economics from University of Hamburg (Germany). His areas of interest include political economy, economic development, governance, and development policy. Dr Chaudhry is a seasoned academic with a diversified research portfolio having extensively published in leading national and international economics journals. Over the years, Dr Chaudhry participated in various international conferences and as a research fellow at Hamburg Institute of International Economics (HWWI), Johnson Shoyama Graduate School of Public Policy (Canada), Harvard University and teaching courses at University of Saskatchewan (Canada). Dr Chaudhry served as Director of Punjab Economic Research Institute (PERI), Planning and Development Department, Government of Punjab.
Dr Abiha Zahra
Assistant Professor, Information Technology University
Dr Abiha Zahra is an Assistant Professor in the Department of Governance and Global Studies, Information Technology University. She has obtained her PhD in Public Administration from KU Leuven, Belgium as an IRO doctoral scholar. Her research revolved around structural reforms and performance management systems in the state organisations of Pakistan. She has also worked in the Department of Political Sciences, University of Oslo, Norway to explore the role of political and administrative state actors in reforms. Prior to joining the Information Technology University, she has served as an Assistant professor at University of Management & Technology and as a Lecturer at University of Central Punjab. She wrote a book on “Adjusting Structures and Procedures” in 2020 and has been the Winner of UNDP, Government of Pakistan and Accountability Lab’s Sustainable Development Goal SDG 16 Innovation Challenge (2018) based on the idea for involving youth in policy-making.
Mr Nadir Salar Qureshi
Chief Investment Officer, Engro Corporation
Mr Nadir Salar Qureshi is the Chief Investment Officer of Engro Corporation. He joined Engro Corporation Limited in March 2017 as Chief Strategy Officer and was then appointed as the Chief Executive Officer of Engro Fertilizers in December 2018. He has completed his MBA from Harvard Business School, and his Bachelors and Master’s degrees in Nuclear Engineering from MIT. He brings with him expertise in multiple sectors across GCC, Turkey, Australia, India, ASEAN and EU. He is also experienced in consulting, private equity and finance. Mr Qureshi began his career with Engro Chemical Pakistan Limited as a Business Analyst and then moved on to organizations such as Hub Power Company, Bain & Company, Carrier Corporation, Abraaj Capital and Makara Capital in Singapore.
Maheen Rehman
CEO, InfraZamin
Ms Maheen Rahman has over twenty years of experience in investment banking, research and asset management. Currently she serves as the Chief Executive Officer of InfraZamin Pakistan, a Private Infrastructure Development Group (UK) company. In her previous appointment, Ms Rahman served as the Chief Executive of Alfalah GHP Investment Management. Prior to that, Ms Rahman was the Chief Executive of IGI Funds, Head of Research at BMA Capital Management, Corporate Finance Associate at ABN AMRO Bank and Investment Banking analyst at Merrill Lynch. She has the experience of working across multiple geographies during her career. Ms Rahman has been featured on Fortune’s “40 Under 40’s Women to Watch” list, in 2015.
Event Chair
Air Marshal Asim Suleiman (Retd)
President, CASS Lahore
Event Coordinator
Bilal Ghazanfar
Associate Senior Researcher, CASS Lahore
Master of The Ceremony
Rameen Shahid
Researcher, CASS Lahore
The Centre for Aerospace & Security Studies (CASS) was established in July 2021 to inform policymakers and the public about issues related to aerospace and security from an independent, non-partisan and future-centric analytical lens.
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