Curb imports, boost exports: Dr Bengali

KARACHI: The fiscal deficit can only be reduced by curbing imports and boosting exports, said senior economist Dr Kaiser Bengali while addressing a webinar.

Speaking at a post-budget webinar organised by The Knowledge and Future (TKF) on Friday Dr Bengali pointed out the alarming trend of businesses being sold and businessmen leaving the country, exacerbating economic challenges. He also said that currently there are two Pakistans -- one of the elites who are rulers and the second is of ordinary people.“You can see a huge rush in malls of Islamabad where even vitamins-enriched imported food for pets is available in racks,” he said adding that even prices the pulses have increased so much that an ordinary citizen cannot buy them.

Dr Bengali warned that the current economic model is unsustainable, particularly with the continued reliance on non-commercial vehicles and consumer imports. He criticized the government’s approach to managing the deficit, stating that it is primarily being met through increasing loans. He expressed concern that these loans are largely being used to repay previous debts rather than being allocated towards the welfare and development of people.

He further stated that Pakistan’s tax system has become more of an extortion system, disputing claims that a majority of citizens do not pay taxes. He highlighted the presence of wealth in both rural and urban areas, challenging the narrative of widespread tax evasion among the general population.

Reflecting on the country’s economic history, Dr Bengali noted that over 100 industries were privatized after 1992, yet the proceeds were squandered on non-developmental expenditures. He argued that at least 18 federal government divisions should be closed, citing the reopening of 17 divisions that were initially shut down following the 18th Amendment.

He called for a reduction in non-combat defence spending, pointing out that many cantonments are unnecessary and highlighting India’s example of repurposing cantonment lands for local governments.

Discussing Pakistan’s financial struggles, Dr Bengali warned that the country is facing increasing difficulty in securing loans, even from the IMF. He cited the ongoing privatization issues with Pakistan International Airlines (PIA) as evidence of the country’s dwindling economic appeal, with no buyers showing interest in buying the national carrier.

He expressed deep concern over the government’s decision to sell agricultural land to foreign entities, warning that this could lead to food insecurity. He criticized the focus on growing fodder for animals at the expense of essential crops like wheat and pulses.

He also highlighted Pakistan’s dependence on imports for essential commodities, noting that a significant percentage of staples like wheat, pulses, and vegetable oil are imported. He urged the government to prioritize domestic production and allocate more land for the cultivation of key crops, particularly in Sindh. In her welcome remarks, TKF Director Zeenia Shaukat said the 2024-25 budget has put an extra burden on ordinary people.