Experts suggest macro-economic stability to boost growth, create jobsBreaking

May 20, 2024

To achieve sustained growth and resilience, experts emphasized the need to adopt a comprehensive approach for macroeconomic stability, debt recovery, and revenue enhancement, reports WealthPK. “Ensuring macro-economic stability is a cornerstone for economic resilience and progress. It is fundamental to creating an environment conducive to investment, growth, and job creation,” said Dr. Abid Qaiyum Suleri, Executive Director of Sustainable Policy Development Institute (SDPI). “Key measures including prudent fiscal management, effective monetary policies, and structural reforms aimed at enhancing productivity and competitiveness across sectors are necessary,” he suggested. Suleri emphasized the need for fiscal discipline alongside investments in infrastructure and human capital to achieve macroeconomic stability. He said debt overhang remains a significant challenge, with Pakistan grappling with substantial debt servicing obligations. The burden of debt repayment not only strains the fiscal resources but also limits the government's capacity to invest in key sectors crucial for economic development.

He said Pakistan’s economy was falling behind its Asian counterparts due to low productivity growth rates and an unsustainable external debt burden. “Over the last three decades, Pakistan has experienced one of the world’s lowest growth rates in labour productivity, forcing the policymakers to opt for the external debt to achieve short-lived periods of economic growth. However, excessive reliance on the external partners to sustain growth has led the country into a debt trap. The root cause of this issue is the failure to implement reforms that could have improved labour productivity. “This underscores the urgency for robust debt recovery strategies, including renegotiating terms with creditors, exploring debt restructuring options, and improving debt management practices,” said the PIDE executive director. According to the data shared by the State Bank of Pakistan, as of January 2024, Pakistan’s external debt servicing burden for the next 12 months approximates $29 billion.

Talking to WealthPK, Sadiq Amin, Deputy Executive Director of SDPI, said revenue generation was a critical issue, given the persistent gap between revenue generation and expenditure. “Pakistan faces challenges such as tax evasion, a narrow tax base, and inefficient tax collection mechanisms, hindering efforts to mobilize adequate revenue for development initiatives. Implementing measures to broaden the tax base, rationalize tax policies, and leverage technology for efficient tax administration are imperative to boost revenue streams.” Tax collection by the Federal Board of Revenue (FBR) fell Rs1 billion short of the target in March 2024, primarily due to lower domestic taxes and customs duty, according to the recent provisional figures. Revenue collection in March stood at Rs878 billion against a projected target of Rs879bn. It increased by 32.62pc compared with Rs662bn in the corresponding month last year.

Credit: Independent News Pakistan