ISLAMABAD: Federal Minister for Finance and Revenue Dr Abdul Hafeez Sheikh Monday highlighted 10 basic facts about Pakistan, saying there was not a single prime minister in the country’s history who had completed his/her five year’s tenure, while Pakistan had chosen to ignore its people that had grave consequences.
“Not a single prime minister has successfully completed his/her five-year tenure yet, so how sustainability of policies can be assured in such a scenario. The longest tenure was achieved by the former PM Liaquat Ali Khan, who served from 1947 to 1951 and there was none who could surpass him in terms of serving the country in a single tenure. There is a need to ponder over it,” Dr Hafeez Sheikh said in an online webinar arranged by the Institute of Policy Reforms (IPR) titled “Making Pakistan Prosper: Strategy for Economic Growth and Development.”
Highlighting the second fact about Pakistan, Dr Sheikh said Pakistan had passed through patches of higher growth rate during the decades of 60s, 80s, 90s and 2000s but this higher growth could not be sustained for a longer period.
“None of growth spurs could be converted for a longer period. There is a need to ponder why the growth rate fizzled out in a short span of timeframe.” About the third fact, he said despite achieving high growth spurs, it never remained inclusive, so the benefits of higher growth could not be shared with all the segments.
Fourth, he highlighted, there was little integration with the world economy, so we had done a pretty lousy job and it was a big, big fact about Pakistan’s economy. The fifth highlighted point, he said, was Pakistan has chosen to ignore its people that had grave consequences for the country.
Sixth, he said we had done a very bad job on account of taxing the rich, so tax to the GDP ratio remained the lowest in our region. About the seventh fact, he said the period of higher economic growth was followed by frequent transition through changes in government, so such periods had to witness agitations, and lastly lockdowns.
On the eighth fact, he said the limited tenure of elected governments did not help to build institutions and nurture democratic norms. On the ninth point, he said some countries such as China, Brazil and others had achieved macroeconomic stability and then achieved higher growth for longer periods. There is a need to understand that the macroeconomic stability is pre-requisite for sustainable growth, so we need to develop patience for it.
He said no country could achieve sustainable growth without higher savings and investment rates. About the 10th highlighted issue, he said the role of a capable government was very important as it was pre-requisite for achieving the desired destination. The market-based economic system can only deliver instead of running of factories by bureaucrats.
Dr Sheikh said it was good that the current regime in Pakistan had not been accused of any corruption. He said the government had built autonomous institutions, like SECP, SBP, CCP and others, to support economic activities. He said there was a need to figure out peculiar federal structure, where the efficiency of four provincial governments could be assured.
During an answer/question session, Dr Hafeez Sheikh said the economic partnership with China was very important but there was a need to increase utilisation as out of $62 billion projected financing under CPEC, Pakistan utilised over $20 billion so far, pointing out to go beyond the power plants. “We should focus on establishing Special Economic Zones (SEZs) for sustainable economic activities. And it also needs to enhance capacity utilisation of the Gwadar Port otherwise the benefits will remain limited.”
Sheikh said there was criticism when the government talked about the past debt and cited an example that the revenue collection stood at Rs4,000 billion out of which the provinces share stood at Rs2,500 billion, so the federal government was left with Rs1,500 billion.
In such a scenario, he said the debt servicing alone consumed Rs2,700 billion, so it leaves us to start from negative. Meanwhile, former commerce minister, Humayun Akhtar Khan said keeping the exchange rate artificially stable was the biggest problem, as it made imports cheaper, so for short-term benefit, this policy caused harm to our economy overall. He said the IPR research had now found that the massive devaluation did not help either to boost exports because we lagged behind on account of adopting the latest technology.
Arif Habib, renowned business tycoon, said there was an extreme shortage of housing in the country, so the government should introduce fixed tax for the construction sector. He said there was a need to promote mortgage financing in Pakistan as it stood at 1 percent in Pakistan while its share in India stood at 6 percent.
Karen Chen of Challenge Apparel Pakistan said there was a need to increase the pace of economic activities as some Chinese companies wanted to establish their factories in Pakistan within six months, while it was not possible in the existing infrastructure. She also proposed direct flights from Shanghai to Lahore.
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