With throne up for grabs, PBC launches economic agenda for incoming govt

Focuses on long-term measures that promote sustainable investment in Pakistan

KARACHI: The Pakistan Business Council (PBC) launched on Monday a 100-day economic agenda for the incoming government, unveiling a broad 16-point priority plan as Pakistan prepares for its 11th elections, but just the second successive democratic transition of power in almost 71 years.

The agenda largely focused on fixing long-term ills facing South Asia's second-largest economy that has worsened in the run-up to the general elections slated to be held on July 25.

"Pakistan has turned to the International Monetary Fund (IMF) 12 times in the last 28 years," said Ehsan Malik, Chief Executive Officer of the PBC, as he addressed a gathering of businesspersons, media and other officials. "Clearly, there is something wrong going on in terms of policymaking and addressing issues."



His statement comes as Pakistan's economic managers face a headache in tackling a widening current account deficit, which shot up to $15.96 billion in the July-May period of the previous fiscal year, forcing the rupee to plunge against the US dollar to control imports. The rupee has shed close to 13% in the last seven months, but that has not stopped foreign exchange reserves from falling below $10 billion. With an import bill nearing $6 billion in a month, Pakistan faces a real challenge in meeting external obligations and could turn to the IMF again.

"There are not going to be any quick fixes to long-standing issues. Even if we were to bank on help from China, it needs to be in context. We have an (average) trade deficit of roughly $1 billion a month with China. Getting loans from them will not help. We will need to go to the IMF."



Elaborating the 16-point agenda, Malik said creation of jobs through supportive, long-term policies that focus on promoting Pakistan's manufacturing base should be the focus of the incoming government.

"These short-term packages to promote a sector or help increase exports need to end. Long-term policies that promote sustainable investment are needed. Energy cost needs to be decreased for the industry. This will translate to lower costs, higher earnings that would add to the employees' wages."

Malik also came down hard on past mistakes Pakistan made in signing various trade agreements, saying that several manufacturing units including shoes, fans, textiles and tiles have suffered since 2007.

"There was a massive leakage of goods due to the Afghan transit trade. These goods ended up in Pakistan. The government needs to ensure this doesn't happen in the China-Pakistan Economic Corridor (CPEC)."

Shabbar Zaidi, senior partner at AF Ferguson, said the nation needs to bridge the trust deficit more so than the budget deficit even as the latter is tipped to touch 7.1% of GDP or roughly Rs2.45 trillion. "There is a massive trust deficit. Citizens don't trust the authorities. In such a case, you cannot expect improvement. Transparency is needed."

On the other hand, Arif Habib, Chairman of the Arif Habib Group and PBC director, said the previous government mishandled raising money for LNG projects, opting to finance them through the public sector development programme instead of tapping international markets. This, he said, increased fiscal deficit.



"As far as power distribution companies are concerned, they were oversold by the government. When you looked closely, nearly all of them were loss-making. Their tariffs were near expiry and needed revision. This is why they didn't attract investors. Now, they will need financial restructuring."

Published in The Express Tribune, July 10^th, 2018.

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