A lot has been said and written about the annual budget but majority of analysts are of the view that there seems no strategy in place to redress the ailing economy and reverse the declining trends on economic indicators.

 As a matter of fact, an annual budget is a reflection of the priorities of any government. It shows what steps the government plans to take for the development of the country in the next one year and how these steps will improve the lives of the citizens.

However, there is no clear strategy in this regard in the federal budget 2023-24. The main reason for the economic problems that Pakistan is currently facing is our limited foreign exchange reserves.

This is the reason why sometimes we have to knock on the door of the IMF and sometimes we have to ask a friendly country. Despite this, the government has not given any relief in the budget for the recovery and development of the crisis-stricken industry for the past one year.

The biggest problem facing the industry as a whole is the continuous increase in energy prices. The export industry is facing more difficulties in this regard because the goods we have to produce and supply to the global markets are not the only monopoly of Pakistan.

Our neighboring countries are our biggest competitors in global trade. They have access to cheaper gas and electricity than Pakistan so their cost of production is lower and they are earning more foreign exchange than us by selling goods at lower prices to customers. Due to increase in gas and electricity prices, Pakistan’s textile industry has lagged far behind in the competition with other countries in the region.

Apart from this, instead of giving a chance to flourish, our industrial processes are always kept under the pressure of bureaucracy and tax authorities. To improve the business environment in Pakistan, no government has paid attention to “Ease of Doing Business” till date.

The reason Pakistan is at the crossroads at present is the policies of the last several decades which are changed every few months to achieve short-term goals or to please a particular section. If this government believes in advancing the journey of development on a stable basis by promoting industrialization in the country, then first of all it is necessary to make a long-term policy for industrialization.

In whatever policy is prepared in this regard, it is necessary to consult with all the stakeholders of the industry as well as to assure the political leadership that any political party forming the government in the future will not change this policy. 

With this initiative, industrialists will be able to carry out industrial processes by planning on a long-term basis and Pakistan will not have to beg for loans from the IMF or other international financial institutions every now and then due to economic crisis.

At present the situation of the industry is that billions of rupees are stuck with the government due to delay in payment of refunds of sales tax and other duties and taxes.

On the other hand, the interest rate has reached 21 percent, due to which it is becoming more and more difficult for the industry to obtain loans. Moreover, the dollar is continuously increasing in value against the rupee and the inflation rate is at the highest level in history.

All kinds of industries are suffering because of this. The government should think how the country will develop in such conditions. Where will the jobs be available to the thousands of youths who go to different factories and offices every day to get jobs? Although the government has substantially increased the salaries of government employees in the budget, no government has the capacity to provide jobs to all job seekers. Therefore, immediate steps are necessary for the restoration of the industry, because if the wheel of the industry runs, people will get employment.

If the industry does not survive, people’s jobs will also be lost. The rulers need to understand the basic point of the economic system that the increase in foreign exchange reserves is possible only by increasing exports.

For this, the potential of IT and other sectors should be looked at in addition to textiles. Our first priority should be to restore the balance of trade. The balance of our trade is not in our favor at the moment, due to which we are forced to take new loans to pay the old debts and also to pay the interest on them.

In this regard, we need to study the Bangladesh model, how they have made their country economically stable by consistently implementing the export-oriented growth policy.

Apart from this, overseas Pakistanis are also an important source of foreign exchange. If they are given special incentives for sending remittances, this can also significantly increase Pakistan’s foreign exchange reserves. It is worth mentioning here that in order to restore the balance of trade, we need to tighten the policy regarding imports as well.

Foreign exchange should not be wasted on  basic food commodities, raw materials and machinery required for industry and other non-essential items. This will provide an opportunity for investors to produce locally substitutes for goods imported from abroad, thereby creating new employment opportunities. These are some of the basic points that we can follow to start the journey of standing on our own feet.

Published in The Daily National Courier, June, 16 2023

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