Pakistan is in economic crisis, says Prime Minister Shehbaz Sharif

Islamabad:

Pakistan was once widely seen as the next “Asian tiger” but has found itself mired in the financial crisis, Prime Minister Shehbaz Sharif has said, citing three critical structural flaws that have prevented its economic takeoff, stunted its growth and led repeated cycles of boom and bust.

As Pakistan turned 75 on Sunday, Sharif wrote an essay in The Economist magazine in which he said the country in his 1960s teens was brimming with hope and promise as he had a date with fate.

He said the nation was widely seen as ready to “become the next Asian tiger”. However, in 2022, Pakistan found itself mired in its latest economic crisis, Geo News reported on Monday.

“This one [latest economic crisis] was born out of the most challenging global political environment of our time, characterized by a commodity super cycle, historic monetary tightening at the US Federal Reserve, and conflict in Europe tearing apart the post-war global order’ ‘, Sharif wrote.

“But it also stems from local weaknesses: weaknesses that went unaddressed for the better part of five decades; weaknesses that forced us to approach the International Monetary Fund (IMF) repeatedly during that time. It’s not how successful nations are built,” he said.

Sharif then cited three critical structural flaws that stand out in the country.

“These have prevented economic take-off, stunted our growth and led to repeated cycles of boom and bust since the late 1980s,” he said.

“First, our political environment has become increasingly polarized. Instead of debating how to better run Pakistan and rid the country of poverty, political parties have been at each other’s throats,” the Prime Minister wrote. minister.

“Secondly, we have not invested enough in the cogs of development: education, health and infrastructure. This is partly due to extremely low tax levies, but it also reflects our public spending priorities, some of which can be attributed to the complicated neighborhood we live in, including a long-standing contentious relationship with India, Russia and then the American invasion of Afghanistan and the influx of millions of refugees into Pakistan.

“Third, we have become inward-looking in ways that have prevented us from reaping the benefits of globalization through the free exchange of people, goods, capital and ideas. Our ability to make friends – and keeping them – on the international stage has weakened considerably over the years,” he said.

The prime minister lamented that Pakistan is doing next to nothing as per the demands of the world as local businesses remain very comfortable operating within the borders, according to the report.

“Pakistan is now one of the most consumer-driven economies in the world, with consumption accounting for over 90% of our GDP (gross domestic product). In contrast, we invest only 15% of our production and only export 10% Annual inflows of foreign direct investment represent less than 1% of GDP,” he wrote.

“These dismal statistics reflect the flaws in our economic model. No prosperous country has ever experienced such growth,” he said.

On the occasion of Pakistan’s Diamond Jubilee, Sharif said that as the country turned 75, the moment deserved serious soul-searching.

He said the world’s fifth-largest country, where two out of three people are under 30 and full of aspirations, is stuck with an income level of just $1,798.

One in three people live on less than USD 3.20 a day. And less than a quarter of the country’s women work outside the home; more than a third of Pakistan’s population cannot read or write, he said.

“Our immediate priority is to navigate safely through our current economic crisis. We are not alone in this. The whole world is facing a difficult year. But we have the protection of an IMF program to help us through. While some measures will create hardship and require sacrifice, we are committed to implementing the program. This is our path to safety,” Sharif wrote.

“This tough time also presents us with an opportunity. If we can get a basic set of things right, there’s no reason why we can’t turn things around. What will it take? Consensus on direction that Pakistan has to take in. There will always be political differences in a democracy like ours.

“But there must be agreements on a few principles: to manage our finances prudently, to invest in our people, to encourage merit and innovation and to promote regional peace. It is within our reach,” he said. .

Sharif said at the same time that it is important to modernize Pakistan’s social contract and that people should pay their fair share of taxes in exchange for vital public services.

“We must do better for our young people and our women, and enable them to achieve their aspirations and become engines of our economic growth. We must have a clearer idea of ​​the values ​​​​that our nation must espouse, including tolerance, hard work hard work, meritocracy and justice – and the place we want Pakistan to have in the world as a responsible and modern nation,” he wrote.

Cash-strapped Pakistan is facing increasing economic challenges, with high inflation, dwindling foreign exchange reserves, a growing current account deficit and a depreciating currency.

With the current account deficit increasing to $13.2 billion in the first nine months and pressing demands for repayment of external loans, Pakistan needed $9-12 billion in financial assistance until in June 2022 to avoid further depletion of foreign currency reserves.

(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)

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