Export-led economic growth only way to break begging bowl: Gohar Ejaz

ISLAMABAD: APTMA’s patron-in-chief Gohar Ejaz has come up with the recipe for the government of the day to wriggle the country out of debt trap and begging bowl, saying that export-led economic growth is the only viable and sustainable solution to steer the country towards a bright future.

In a statement, he said that the incessant investment and enhancement of production and export capacity is primarily dependent on a long-term textile policy and continuation of regionally competitive energy tariffs to the export industry.

He stressed the export-led economic growth policy is imperative to avoid social, economic, and political unrest because of increasing unemployment; the ever-increasing inflation requires employment opportunities in large numbers, which can only be generated through enhanced investments in production capacities creating new jobs.

Pakistan has been trapped in an unsustainable debt cycle for decades, with most recent figures depicting the balance of current account in deficit for the fourth successive month in March at a moderate $47 million, according to Pakistan's central bank. The foreign currency deficit is currently being financed through loans and bonds.

There are three ways that can be considered to finance a country’s current account deficit that include foreign direct investment, loans, exports and workers’ remittances.

Short-term economic fixes, he said, will never amount to the sustainable growth needed for Pakistan’s economy, and the same is to be said of seeking IMF loans and bailouts. “The country has relentlessly sought loans to achieve economic stability, which have naturally come with countless conditionalities.”

The IMF is the international lender of the last resort and only the countries faced with severe balance of payment difficulties are recommended to approach the IMF for emergency lending to secure a temporary relief. However, Pakistan has approached the IMF 22 times since 1965.

He said that debt sustainability analysis suggests that at the current level of GDP growth, the country’s debt is not sustainable, that is, the Debt to GDP ratio will continue to increase if the country grows at a rate hovering around 4pc.

Gohar argued saying that textile exports represent 62pc of total exports and hence are the engine for the export growth policy for our country. Enhanced exports are the only tool to break the begging bowl and achieve real economic and political sovereignty.

“Pakistan must target higher economic growth by prioritizing value-addition, particularly in the highly productive textile sector, where regionally competitive energy is the primary path towards real progress.” He said that during periods where regionally competitive energy tariffs were given by the government, the export-oriented industries proved the critical role of these tariffs, by immediately showing an upward trend in production, reaching full capacity, as well as creating new jobs, new investment and leading to all mills becoming operational.

Textile exports have increased substantially, with a 9 percent increase in the last nine months of FY21 but have hit a ceiling in terms of industrial capacity availability. The increase in export demonstrates the competitiveness of Pakistan’s exports – when inputs were provided at regionally competitive prices, exports potential was fully realised inspite of an unfavourable international environment created by the pandemic.

For the current fiscal year 2021, he said, exports are well on target to cross $16 billion and will increase by a further $3.5-4 billion and climb to $20 billion in the next year due to unprecedented investment in expansion and new projects -- a direct consequence of the government’s regionally competitive energy pricing policy. “With this evident correlation between energy tariffs and the country’s investments and exports, it cannot be emphasized enough that removal of this policy will completely derail the momentum gained so far.”