Zafar Masud Kamran Khan Kay Saath – A discussion about sustainable development and solutions required for the economic problems of Pakistan.
Zafar Masud (President & CEO – BOP) shares his expert opinion and insights on sustainable development and solutions required for the economic problems in a special series of Dunya News focusing on Pakistan’s debt problem.
Pakistan’s debt has increased significantly in the past 15 years. Here are some key points:
- Pakistan’s external debt for 2018 was $99,223,959,505, which represented an 8.25% increase from 2017.
- The incumbent government has almost doubled Pakistan’s external debt in just three years.
- During a five-year rule, Pakistan’s external debt increased from US$52.4 billion to US$75.3 billion, an increase of 226.80 percent.
- The Pakistan government’s total debt has increased by 34.1% year-on-year to Rs. 58.6 trillion at the end of April.
- In January 2023, Pakistan’s government debt jumped by PKR 4 trillion, which is a 30% increase over the past year.
Zafar Masud argues that Pakistan’s debt burden has a significant negative impact on its geostrategic interests. He proposes a number of ways to address the negative impact of debt on Pakistan’s geostrategic interests:
- Reduce the debt burden. This can be done by increasing tax revenue, reducing government spending, and growing the economy.
- Diversify the debt portfolio. Pakistan should reduce its reliance on external debt and increase its reliance on domestic debt. This will make it less vulnerable to pressure from foreign creditors.
- Improve debt management. Pakistan should improve its debt management practices to reduce the cost of servicing its debt and the risk of default.
- Strengthen the economy. Pakistan should focus on strengthening its economy, which will make it more resilient to external shocks and less vulnerable to debt distress.
- Pursue an independent foreign policy. Pakistan should pursue an independent foreign policy that is in its own best interests, rather than being beholden to its creditors.
Masud argues that these measures are necessary to protect Pakistan’s geostrategic interests and ensure its long-term security and prosperity.
The economic challenges facing Pakistan today are daunting and the roadmap for enhancing wealth and prosperity for the 230+ million citizens needs to be fostered. While the resumption of the IMF program is critical for addressing our immediate financial needs, their standard prescriptions may only address our short-term challenges. What we need is a radical transformation in the way the economy is structured, the way policy is formulated and implemented, and the redistribution of wealth in a more equitable manner. That is the only way forward to escape from the boom & bust cycles that have plagued our economy over the last many decades.
In the previous article, we had focused on the fiscal policy challenges and how it was driving the current economic crisis. In today’s article, we argue for finding evidence based solutions to tackle our financial challenges and devising a home grown roadmap for equitable prosperity.
The Federal Board of Revenue (FBR) needs to develop capacity to formulate practical evidence-based policies and implement them. According to the Pakistan Business Council (PBC), there is Rs. 1.8trn tax potential from real estate and retail sectors alone that has currently been ignored.
Video originally posted here.