It is time for Pakistan to address the core issues plaguing its economy to fix it once and for all, said Bank of Punjab (BoP) President and CEO Zafar Masud on Friday, adding that weak regulators governing public sector entities (PSEs) were responsible for downfall.
During a talk about economic challenges at Habib University, Masud said, “Pakistan is done with doing patchwork in the economy. Now the time has come to address the core issues plaguing the economy to fix them once and for all. It will not be an easy path”.
Explaining that the benefits of correcting the fundamentals will come in the medium to long run, he said, “IMF (International Monetary Fund) or no IMF… we must fasten our seat belts and be prepared for a rough ride.”
Highlighting that the country possesses ‘weak regulators’, he said that “We need to make them strong before thinking about privatising state-owned entities (SOEs).”
Masud, who is also Chairman of the Oil and Gas Development Company Limited, underlined that “Privatisation is not a solution for all 206 PSEs. They are most utility companies and one cannot get rid of them through privatisation. Their transformation from PSEs to private entities will only raise new issues.”
Strong regulators will improve governance at PSEs which is the main solution to overcoming losses at these entities, he said. Stressing on the importance of finding the right partner to sell an entity for privatisation he said, “Selling a PSE to a private equity firm would be a disaster in the making.”
When asked by the moderator – who is also Assistant Professor of Social Development and Policy at Habib University – Dr Aqdas Afzal if the revival of the IMF programme was Pakistan’s only solution, Masud said, “IMF or no IMF, the nation has to help itself. No one will come from outside to address our issues. We have to do it ourselves; we need to stand on our own feet.”
Explaining that the central bank’s limited-time scheme – TERF (temporary economic refinance facility) – under which low-cost financing worth Rs436 billion was offered to businesses to expand and build new factories during the Covid-19 pandemic, was a step in the right direction.
“The scheme could have been made more beneficial to the nation if the financing was offered only to the export sector. We need to diversify exports instead of heavily relying on textiles,” he said.
“We need to create an exportable surplus to overcome the recurring issue of our foreign exchange reserves depleting,” he said.