IN its South Asia Economic Focus report, World Bank has warned Pakistan that its external sector situation could become unsustainable due to lack of policy actions. The report claim, that Islamabad needs $31 billion this year to meet foreign financial obligations, is contrary to the fact yet there is no doubt that the country is currently facing grave problems which can only be addressed through right kind of intervention in different sectors.
A year back the country was in a very comfortable position when reserves were not only sufficient to cover the gross external financing needs of the country but even the entire stock of portfolio investments but during the current fiscal year the reserves will be under lot of stress due to scheduled debt repayments which will create an external financing need – something which will not be easy to acquire from world lenders such as the IMF or the World Bank due to their tough conditions. Economic experts are also warning the government of serious economic crisis over the next few months if the government does not take important decisions with a view to improving the economy. Recently, Economic Coordination Committee of the Cabinet took a very important step by enhancing regulatory duty on around 297 items in a bid to discouraging the surge in the import bill and slashing it down by $3 to $ 5 billion. But we feel this will not be enough and more out of box solutions on emergency basis – the ones that reduce our dependence on foreign aid – will be required to fix the problems that are haunting the country. Decline in gross inflows will make repayments very difficult, which must be taken into account by officials of the Ministry of Finance and the State Bank. Often it has been seen that whenever government comes near to completion of its tenure, the problems start surfacing and ultimately the next government again has to knock at the doors of the lenders to address economic woes. For how long, the people of this country will continue to suffer due to myopic and worthless policies of our corrupt rulers to fix the problems. Time has surely come that a team of competent, loyal and honest economists is formed to pursue and sustain homegrown economic policies after taking on board all political parties, which is the only viable course left not only to improve the living standards of our people but to ensure ‘country’s sovereignty’.