Dr Pasha warns of hard times ahead; imports hit record $6.3 billion in June

LAHORE: Pakistan’s former finance minister Dr Hafeez Pasha has warned of difficult times ahead as the country registered a record high imports of $6.3 billion in June 2021, while the current account deficit remained at $1.3 billion.

Addressing an economic session on the “Pakistan Economy ‑ Challenges and Solution”, organised by the Pakistan Industrial and Traders Association Front (PIAF), he predicted the total annual import figures would touch the level of as high as $70 billion, which is impossible to manage with the exports of just $25 billion.

The former finance minister predicted that the current account deficit will surpass $6.7 billion next year, as the country would have to enhance payment in its debt servicing by at least 35 per cent, which is alarming.

He appreciated the record remittances of $29.4 billion sent by the overseas Pakistanis, but alarmed that the remittances will decline next year, as Pakistan spends around $3 billion to $4 billion annually on foreign travels, which have been saved this year, lifting the figure of remittances.

FPCCI former president and Businessmen Panel chairman Mian Anjum Nisar asked the authorities to focus on further accelerating exports, besides keeping some check on unbridled imports of luxury items.

The economic managers will have to chalk out a long-term plan for import substitution and increasing exports so that Pakistan could become self-reliant, he said, and emphasised on the need for adoption of international best practices for priority sectors and consultations with the international experts to achieve success, Nisar added.

Addressing the meeting, PIAF chairman Mian Nauman Kabir said that the fiscal sustainability has become a major issue of the Pakistan economy, as its servicing debt accounts for more than one-thirds of its federal budget.

Pakistan’s trade deficit keeps on widening, despite a much-trumpeted increase in exports, which were, in fact, not sufficient to match the huge surge in imports, Kabir said, adding that the government has spent interest payments on debt worth Rs3.06 trillion, while spending only Rs600 billion on subsidies and Rs100 billion for the Covid-19 vaccinations.

Kabir also said that Pakistan’s reliance on debt is a violation of the country’s Debt Limitation Act, adding that the low exports volume and rising trade deficit were chronic issues, which should be resolved permanently.

During a question-answer session, Dr Pasha informed the trade and industry representatives that another National Action Plan should be initiated that was launched against terrorism.

The Pakistan Army remained successful in eradicating terrorism from the country but it is reemerging in the country now, as incidences of violence are rising in Balochistan, while the recent Lahore bomb blast was also horrifying.

“We are [a] resilient nation, as we have approached the IMF [International Monetary Fund] 22 times in the 74 years history of Pakistan but our economy never collapsed,” he said, adding that Pakistani nation remained successful in all kinds of crises but this success story has not been sustainable for the long-term.

“When I was the finance minister, the US ambassador warned me that he would stop the USAID fund for Pakistan because I was promoting Pakistani products and trade,” he recalled.

He stressed the need for at least 7 per cent GDP growth rate to absorb the large number of unemployed youth, eradicate poverty and to manage the rising public debt. For this purpose, the country needs an equitable taxation system and high growth in exports, he added.

Dr Pasha also raised objection over the calculation of GDP growth figures and said that the last fiscal year growth was reported as minus 0.47 per cent but actually it had dropped to negative 2 per cent because of massive contraction in the economy.

The Pakistan Bureau of Statistics (PBS) needs to be strengthened, so that they could calculate official figures accurately, he said, adding that the industries contribute more than 70 per cent in tax revenue, as the industrial sector gives almost Rs3.5 trillion taxes in various forms. On the contrary, the Rs25 trillion real estate sector pays just Rs12 billion tax, which is totally unjust.

In the same way, 22 per cent agricultural land, which is owned by just one per cent of the landlord elite, shares only Rs2.5 billion in tax revenue.

On the occasion, Dr Pasha also announced to launch his new book “The Charter of Economy” from the platform of PIAF on the request of its chief.

“It is [an] honour for me to launch the new 346 pages book on economy from the Lahore prestigious trade and industrial body’s platform, Dr Pasha said.

He informed that one chapter of the book is dedicated to the Small and Medium Enterprises (SMEs) sector.

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