Economic challenges ahead

The recently concluded elec­tion has left the public eager­ly awaiting a clear strategy from political parties to address press­ing economic concerns, includ­ing inflation, growth, debt, and investment. Currently, inflation stands at a staggering 31.4%, driv­en by high energy and food pric­es. Meanwhile, our GDP lags be­hind global standards, public debt has hit record levels, and the in­vestment budget remains insuffi­cient to set the country toward a growth trajectory.

To begin with, the State Bank’s attempts to control inflation through monetary tools have failed due to deep-seated struc­tural issues. In Pakistan, the gov­ernment is the largest borrower, and a higher policy rate translates to increased debt-servicing costs for the government. This, in turn, leads to a rise in inflation as the government raises taxes to man­age the fiscal deficit.

Furthermore, despite being one of the world’s top five most popu­lous countries, Pakistan’s GDP re­mains disproportionately low. The lack of incentives for private invest­ment, coupled with low agricultural productivity and uncompetitive ex­ports, stagnates growth. Addition­ally, achieving growth becomes im­possible when the government has no money left to invest in its own people after fulfilling obligations such as interest payments, provin­cial transfers, and pensions.

Despite celebrating the victo­ries, political parties must recog­nize the gravity of the challenges facing the nation. It is necessary to complete the Stand-By Agreement and get another IMF program to effectively manage debt rollover. Moreover, tackling issues such as privatization of state-owned enti­ties, pension reform, and broad­ening the revenue base will re­quire concerted efforts.

The legitimacy of the new gov­ernment holds significant impor­tance in building trust among the public and implementing much-needed structural reforms. Only through these measures can we uplift the lives of ordinary citizens and set our country on a prosper­ous economic path.


Tando Adam.

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