Pakistan will have to open up trade with India for bringing back international confidence into Pakistan’s economy. This was stated by Pakistan Institute for Development Economics (PIDE) Vice Chancellor Dr Rashid Amjad on Wednesday.
He was speaking at a roundtable conference titled “Global Economic Crisis, Regional Dimensions, and Pakistan” organised by the Institute of Regional Studies (IRS), said a press release issued by the institute.
He added that economic protection should always be time-bound, because after a certain period of time, it becomes unsustainable. While brushing aside strategic concerns, Dr Amjad argued that weak economies could never gain strategic edge over rivals through short-term measures. He argued that Bangladesh and India would not be affected as adversely as Pakistan because of their strong macro economic fundamentals.
He was of the view that Pakistan would have to address its vulnerability to external shocks by improving its tax to GDP ratio. He strongly advocated the implementation of the Reformed General Sales Tax (RGST) for revenue generation. “Pakistan needed to ease its monetary policy, cut its public expenditures, and reorient its Public Sector Development Program (PSDP) toward competitiveness,” he added.
Dr Amjad warned that devolution of powers to the provinces through the 18th amendment and the 7th National Finance Commission (NFC) Award might complicate the process of economic planning.
Moreover, he asserted that any country’s fiscal deficit was directly related to its balance of payments and debt-burden. He called Pakistani economy resilient and capable of bouncing back, and added that the country had missed some important periods of higher economic growth rate where it could have undertaken sound economic reforms.
Dr Amjad said that with the improvement in the terms of trade, Pakistan could strengthen its agricultural sector for overall economic development. This is possible, because the demand of such product is increasing in China and India, he added.
Published in The Express Tribune, November 17th, 2011.
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