Jasia Khan
The writer is a graduate in English Literature from University of Sindh / a CSS aspirant
Economic growth is indispensable for a state, as it serves as a foundation for enhancing the overall quality of life for its citizens. When an economy grows, it typically leads to increased employment opportunities, higher income levels, and improved public services, such as healthcare, education, and infrastructure.
This growth generates additional tax revenue, allowing governments to invest in essential projects and social programs for its welfare. Therefore, economic development for Pakistan is highly significant for its inclusive prosperity.
Pakistan’s economy is currently grappling with staggering challenges, marked by a skyrocketing inflation rate that reached approximately 27.4% in September 2023 which is the highest in decades. Also, the rising fiscal and trade deficits, along with higher unemployment rate are paralyzing the economy.
Short-term factors contributing to this crisis include the aftermath of devastating floods in 2022, which displaced millions and caused damages exceeding $30 billion, disrupting agricultural production and exacerbating food insecurity.
Role of Pakistani Women in Politics – by Jasia Khan
Moreover, political instability and frequent changes in leadership have led to inconsistent and myopic economic policies, eroding investor confidence. As the former Prime Minister Shahbaz Sharif noted, “We are facing the worst economic crisis in our history”.
On the other hand, long-term causes of Pakistan’s economic woes stem from structural issues such as a narrow tax base, poor governance, and extreme reliance on external debt. Owing to the ineffective Federal Board of Revenue (FBR), there are only about 1.2 million taxpayers in a country of over 240 million, due to which, the tax collection remains inadequate, perpetuating fiscal deficits.
The International Monetary Fund (IMF) has indicated that without significant reforms, Pakistan’s debt is projected to rise to 100% of GDP by 2025.
Therefore, such challenging economic conditions should be solved at immediate pace. Firstly, the continuity of economic policies and political stability are majorly needed. It depends upon the elections then the behavior of political parties towards them. Economy must not run only by the political interests but also on economic realities.
Similarly, vital structural reforms are highly important. Public sector, oil and gas sector (PIA, railways) need reforms because due to these, we’re going in the loss. The reforms must be designed in a way to reduce the state burden and privatize them so that we can make them more profitable.
Furthermore, diversifying the markets to boost the exports is an essential solution. Former Finance Minister Miftah Ismail stated, “We must diversify our economy for a resilient future.”
This includes a shift from raw material exports to producing value-added goods that helps in enhancing competitiveness in global markets, investment in technology as well as agricultural sector to blossom the productivity and focus on the untapped tourism sector.
Along with this, the inclination towards the renewable sources of energy can lessen the economic burden of the country and actually lead to its growth. In addition, for a friendly environment which urges foreign investors to invest here, Pakistan needs to obliterate corruption, increase security, lower the energy prices, and make the country attractive for them so that they offer to invest here.
Pakistan’s economy has been suffering from decades and it is high time that the relevant stakeholders realize the need for a strong economy for the country’s prosperity. As former
Pakistani economist Dr. Ishrat Husain said:
“Economic strength is the foundation for a stable society and a robust state. For Pakistan, achieving sustainable growth and resilience is not just a goal; it is a necessity for our future.”
Pakistan in the World – October 2024
