Countering economic turmoil

Now that the polls in Pakistan have reached a peaceful con­clusion, the new government that will assume power will face mul­tiple challenges. It is tangible that things for the new government will be quite challenging. One of the critical crises that plague the country is economic instability. Lack of foreign direct investment (FDI), crippling foreign exchange reserves, domestic inflation, and the free fall of the rupee against the pound are all contributors to the economic meltdown.

Similarly, the post-develop­ments of the no-confidence mo­tion against the former Prime Minister in 2022 also fueled the economic woes of the country. It is because political stability is di­rectly linked to economic stability. Once political stability becomes unstable, the doors to worsening economic crises are opened. The same episode was witnessed in Pakistan post-no-confidence.

In this context, fiscal deficit and high debts also grapple Pakistan. As per certain reliable sources, Pakistan has a large external debt surpassing $120 billion and an in­creased fiscal deficit. Such a pa­thetic condition of debts aggra­vates external shocks.

The Pakistani economy relies largely on low-value-added ex­ports like textiles, making it vul­nerable to global competition and price fluctuations.

The upcoming government should tirelessly work to pull the country out of economic turmoil. For this, I think the new govern­ment should devise strong plans to improve the following econom­ic debacles. The first one in this pursuit is to secure a new IMF program. Fiscal discipline mea­sure in this program is crucial to stabilise the economy.

Secondly, expanding the tax base and improving tax collec­tion is necessary to bolster gov­ernment revenue without mas­sive borrowing. Thirdly, the new government needs to prioritise essential expenditure. Curbing wasteful spending can reduce the fiscal deficit and open up develop­mental opportunities.

Fourthly, investing in export-related industries with high val­ue-added goods can boost the economy. It can also generate better returns. Last but not least, it is direly crucial to attract pri­vate investment. For this, reform­ing SOEs to improve efficien­cy and profitability is necessary. There are greater chances that these solutions can reduce fiscal burdens and revitalise the eco­nomic engine of Pakistan.



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