ISLAMABAD: Output plays a vital role in maintaining a healthy economy. Boosting output not only enhances employment rates but also helps reduce inflation.
Talking to Media, Chief Economist at the Ministry of Planning, Development, and Special Initiatives Aslam Javed expressed concern over the existing economic strategies of Pakistan. He said stringent monetary and fiscal measures implemented by the government had already started negatively impacting the country’s output.
Pakistan’s export-oriented industry, which relies heavily on imports, contends with the added difficulty of fluctuating global market prices, exacerbating financial pressures on the already costly manufacturing industry.
“International prices are influenced by the supply and demand shifts, further contributing to economic instability. Moreover, the sectors that have already benefited from the subsidized support have not developed the resilience required to compete on a global scale without government aid. This dependence casts doubt on the long-term efficacy of such subsidies,” he said.
Additionally, the broader population has borne the cost of these subsidies through tax contributions and reduced spending on essential public services and development projects.
This has led to growing opposition to policies that favour certain sectors over broader social welfare. For instance, during a recent Senate Standing Committee on Finance and Revenue meeting, Minister for Planning, Development, and Special Initiatives Ahsan Iqbal voiced concerns over a potential cut of 200 to 400 billion rupees from the overly ambitious Public Sector Development Programme (PSDP) budget of 1.4 trillion rupees.
Talking to Media, Additional Secretary of Trade and Diplomacy at the Ministry of Commerce Ahsan Ali Mangi said Pakistan continued to export surplus goods rather than developing a production base focused on exports.
“A notable exception might be the IT sector, which could greatly benefit from the targeted support to fully realize its potential,” he highlighted.
Despite the government’s efforts to reassure markets by highlighting positive macroeconomic indicators —such as a shrinking trade deficit and rising foreign exchange reserves — a closer examination reveals fewer encouraging details.
Moreover, the narrowing of trade deficit is mainly attributed to a decrease in imports, which has adversely impacted productivity. Furthermore, the rise in reserves is primarily fuelled by debt rather than indicating true economic progress.
To break free from the longstanding economic challenges, the economic leadership must abandon the outdated policies and instead pursue innovative solutions. This includes reforming the tax system not only to increase the revenue but also to create a fair, equitable, and non-anomalous structure. –INP
