Assessing Pakistan’s Economic Plan:  Challenges and Opportunities for a Sustainable Future

A seminar titled “Assessing Pakistan’s Economic Plan: Challenges and Opportunities for a Sustainable Future” was organised by the Centre for Aerospace and Security Studies (CASS), Lahore on 23 November 2023. The discussion commenced with a keynote address by Dr Hafeez A Pasha, Former Federal Minister, and a renowned economist. It was followed by the first session in which insightful presentations were delivered by two eminent academics, Dr Mumtaz Anwar Chaudhry, and Dr Abiha Zahra. In the second session, two experts from the industry, Mr Nadir Salar Qureshi, and Ms Maheen Rahman, shared thought-provoking ideas to address the undertaken issue. An extensive Q&A session and concluding remarks by Air Marshal Asim Suleiman (Retd), President, CASS Lahore, rounded up the seminar.

 

In his introductory remarks, Dr Bilal Ghazanfar, Associate Senior Researcher at CASS, Lahore, highlighted the precarious situation of Pakistan’s economy. He emphasised that the ongoing economic crisis stems from imprudent policies and government inaction over several decades. He added that Pakistan’s economic crisis had pushed it further towards dependency on International Monetary Fund’s (IMF) plans. However, despite these challenges, Dr Ghazanfar saw exceptional prospects for profound transformation, suggesting a comprehensive restructuring of Pakistan’s economic architecture rooted in principles and practices implemented by developed nations. He concluded by reflecting on the immense economic potential of Pakistan, which can be harnessed by delving into multifaceted aspects of the economy.

 

Dr Pasha, in his comprehensive keynote address, highlighted the convoluted relationship between Pakistan’s macroeconomic landscape and the defence sector. Accentuating the dilapidated fiscal health of Pakistan, he expressed apprehension over the federal government’s ineptitude to cover interest payments on the national debt, resulting in heavy dependence on borrowing, notably for defence allocations. Through comparative analysis, he argued that the entire defence budget, including pensions, now depends on borrowed funds, a departure from previous self-sufficiency practices in Pakistan. Considering growing regional asymmetries and the widening gap with a neighbouring country, Dr Pasha emphasised that reducing defence spending relative to GDP will adversely affect the national interest. Furthermore, he stressed the need for aggressive resource mobilisation and expenditure rationalisation for economic recovery. He added that tax concessions to the elite are a major hindrance to the sustainable growth of Pakistan’s economy. He proposed a dual strategy to reduce the military’s economic footprint and implement direct taxation in key sectors.

 

The second speaker of the day, Dr Chaudhry shifted focus to theoretical aspects of Pakistan’s economic crisis. He said that politically motivated schemes of priorities and lack of policy continuity are factors behind Pakistan’s current economic meltdown. He expressed concern over party-centric interests and conflicts of interest at various levels while underscoring the crucial role of government institutions and legislators. Furthermore, he pointed out the influence of international actors in Pakistan’s decision-making process and called for inclusivity and reforms in the bureaucratic structure. Dr Chaudhary stressed the importance of civil society in ensuring accountability, analytical skill development for bureaucrats, and addressing challenges in the policymaking process. He concluded by advocating for homegrown policies and inclusivity of academia and industry within the policy making process.

 

The third speaker of the day, Dr Zahra, focused on the public sector reforms for economic resilience and sustainability, and established a potent case for the critical role of public sector reforms in maintaining economic resilience. She said that issue-based and situation-based reforms are a general practice in Pakistan, with political factors significantly influencing restructuring decisions. Dr Zahra shed light on the political motivations behind intermittent reforms in Pakistan and reflected upon the broad-term implications of consistent reorganising and restructuring of public organisations. Suggestively, she emphasised empirical mapping of reforms to ensure economic prosperity and underscored the need for a long-term, sustainable approach rather than politically driven short-term measures.

 

In the second session, the third speaker of the day, Mr Qureshi shared his views regarding the efficient management of SOEs without a fiscal burden. He presented a compelling case for the privatisation of SOEs to address Pakistan’s economic crisis. He elucidated further by providing compelling statistics on SOEs’ financial burden, making privatisation a panacea for Pakistan’s economic woes. He quoted examples of successful implementation of privatisation from India, Egypt, and Saudi Arabia, to elucidate, how privatisation can reduce government burden and improve social outcomes. Mr Qureshi shared his divergent viewpoint that negates the general perception of privatising valuable assets, particularly in the sectors where SOEs are generating profits. He believed Pakistan could realise macroeconomic outcomes and social uplifts if privatisation undergoes in all sectors. To elucidate, he shared insights on Pakistan’s own positive experiences with privatisation, such as the case of MCB, which now contributes significantly in terms of economic growth and contribution to government revenue. Mr Qureshi advocated for a strategic approach to privatisation in Pakistan to unlock economic potential, improve efficiency, and address the current fiscal challenges.

 

The last speaker of the day, Ms Rahman illuminated the intricate relationship between Pakistan’s economy, sustainability, and debt. She said that despite participating in 23 IMF programmes, the nation’s debt is rising and reached 90 percent of the GDP. Apropos of this view, she said that whatever cannot be paid back is unsustainable debt. Moreover, she shared a contrasting argument regarding debt reprofiling, she asserted, that the core solution lies in revenue generation, which, at present, is short of meeting the population’s needs. To address the crisis, she proposed five key avenues to increase revenue generation: taxation reform, industrial sector reform & agricultural development, investment-led growth, public-private partnership, and boosting Foreign Direct Investment (FDI). She also stressed the need to put Pakistan’s economic house in order for improved debt sustainability and an overall revenue framework overhaul. She highlighted the potential for transformation within two decades by drawing parallels with East Asian economies. Ms Rahman expressed optimism that implementing even a subset of the proposed revenue generation strategies can positively reshape Pakistan’s economic outlook within five years.

 

The Q&A session delved into critical aspects of Pakistan’s economy. The speakers highlighted the pervasive problem of parochial interests and stressed the need for a shared vision and long-term strategies for the state-oriented policies between successive governments. The speakers recognised the unproductive role of elite capture in Pakistan and advocated for academia-industry collaboration to address the underlying problems in Pakistan’s economy. Moreover, during the session, speakers highlighted flaws in the tax system, suggesting the elimination of preferential treatment for non-filers. The panel also emphasised the importance of data-driven policies. The speakers underscored the need for comprehensive plans with effective implementation. They emphasised the role of academia and industries, which often gets ignored in policymaking, for sustainable economic growth. Privatisation was discussed as a potential panacea, with considerations for addressing governance challenges and rent-seeking behaviour. The session concluded with a call for domestic improvements to mitigate external influences and ensure a resilient economic foundation for Pakistan.

 

Finally, in his concluding remarks, Air Marshal Asim (Retd) said that there was a dire need for a concerted effort from all stakeholders, including citizens, policymakers, and leaders, to bring about structural transformation in the country’s economy. He called for improving the quality of services, enhancing fiscal management and fostering a more open and dynamic economy. While citing arguments in favour of privatisation, he said that the matter places political representatives at a crossroads, compelling them to decide whether to continue waiting for elusive solutions or proactively seize the metaphorical “silver bullet” that can potentially transform the country’s economic landscape. Air Marshal Asim (Retd) said that Pakistan possesses all the elements necessary for its evolution. He said that its assets include strategic geographic location, a wealth of mineral resources, an untapped tourism sector and the promising China-Pakistan Economic Corridor (CPEC). He emphasised that achieving a robust recovery demands an ambitious medium-term reform agenda centred on fiscal stability and competitiveness, besides a strong sense of political commitment and ownership.