Boom-bust cycle is a recurring feature of Pakistan's economy. Our economic managers do know how to stabilise the economy - rather they seem to have mastered the 'art', carried out at the expanse of the public purse - but it is where they pursue growth that the economy starts heating up.
Finance Minister Muhammad Aurangzeb admitted the same while talking to the media in Kamalia the other day. To paraphrase what the finance wizard said: Pakistan is an import-dependent economy. Economic stabilisation is done by tackling the current account deficit mainly through import compression, besides raising power and gas tariffs and petrol prices - something that slows down the wheel of the economy and stifles economic growth. Once, there is some semblance of economic stabilisation, the steps taken for economic upswing, like increasing imports, lead to a shortage of dollars and an ensuing balance of payments problem - a situation where IMF is left as the only go-to option. And the cycle continues.
How to then go about dealing with these alternate periods of high and low levels of economic activity? The remedy - well, no revelation - lies in an export-led and FDI-laden growth. But that's no quick fix, as the Finance Minister himself remarked: "We do not have a magic wand that this [problem] will go away at once." For our exports to stay competitive in the international market, there is need to bring down their cost of manufacturing by slashing the energy prices, apart from cheapening the working capital - something that necessitates broad-based structural reforms. As for attracting FDI, it requires an environment free from violence and political chaos - for which a political consensus is a must. That's why Aurangzeb too appealed for national unity in the form of a 'charter of economy' to be signed by all political stakeholders - and adhered to at all costs.
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