Govt urged to inject more money to boost spending, jump-start economy

Islamabad: The countries around the world have taken initiatives to mitigate the effects of the coronavirus (COVID-19) pandemic, and nothing could stop them from printing more money for the purpose, so Pakistan, too, should print more money and distribute it through nationwide relief programmes, such as ‘Ehsaas’, to boost spending and jump-starting the economy, said noted economist Dr Waqar Masood Khan.

During an Institute of Policy Studies (IPS) webinar on ‘Pakistan’s Economic Outlook and Way Forward’ with IPS executive president Khalid Rahman in the chair, Dr Waqar, a former federal finance secretary, said the economy needed cash infusion instead of austerity and that could be done by increasing money supply in the system.

He suggested raising the amount being paid under the Ehsaas Emergency Cash programme from Rs12,000 to Rs60,000 split into two tranches. The economist said the savings from less dollar payments due to declining global oil prices would compensate for the reduction in remittances by overseas Pakistanis and drop in export earnings.

He added that those savings would help spur the economy, while the country’s vital dollar reserves won't decline. "The government needs to think at the macro level," he said. Dr Waqar said using inflation targeting and interest rates for growth was impractical economics.

Regarding the upcoming budget, he said it would be a budget put together in a state of war. "It (presenting of 2020-12 budget) will be just a formality so people should not hold any high expectations,” he said.

The economist did not see the next fiscal year being any better if not worse than the current one, which is almost over. "This is because of the economy which is in a nosedive along with the looming risk of food security posed by locust attacks," he said.

IPS senior research fellow Syed Muhammad Ali said food, fuel, cash and healthcare were critical factors for the country in its measures against the pandemic and they should be part of the crisis economy.

He opined that there is an issue of governance. "There is a lot of charity work in Pakistan and this provides a model whether it is for food rations or cash. This model is effective because it is more trustworthy, the distribution process is successful and it is efficient. Economic governance is critical to handling this crisis," he said.

IPS executive president Khalid Rahman said the indigenous community bases could become models of participatory governance. He said mosques could support operational activity during the current Covid-19 crisis as they acted as community centres and not just places of worship.

He said food and energy security was currently critical. "There is no shortage of land in the country and it can be utilised for agriculture to ensure food security. This can even be in the form of kitchen gardening. Now is the time for the agriculture departments to act aggressively to ensure food security in the country," he said.

The other panelists included former water and power secretary Mirza Hamid Hasan, analyst Air Commodore (r) Khalid Iqbal, and executive consultant at the Center for the Promotion of Imports from Developing Countries Zaheeruddin Dar.