The Federal Minister for Finance and Revenue Dr Miftah Ismail, while discussing ‘The Current State of Pakistan’s Economy’ at the Institute of Business Administration (IBA) Karachi on Friday, has said that the previous governments created economic challenges which pushed the country toward the brink of bankruptcy. The IMF deal was done to save Pakistan and because of this government took harsh measures.
The Federal Minister admitted that the inflation rate was the highest since the last four decades; and that his government understands how this has hurt the common man, but is hopeful that things will improve as he foresees electricity prices falling in the coming months.
School of Economics and Social Sciences organized the session that was moderated by the IBA Executive Director Dr S Akbar Zaidi. Dr Miftah Ismail who previously was a visiting faculty member at the IBA, during his presentation, focused on the current economic macroeconomic challenges of Pakistan, and the policies and strategies that have been adopted to face these challenges.
He highlighted the most pressing issue facing the economy of Pakistan. These included the Current Account Deficit, unsustainable and non-inclusive growth, and the policy flaws that hinder the growth potential of Pakistan. He pointed out that going to the IMF was a hard political decision, but it was the last resort.
He ended his presentation by talking about the damage in terms of life and infrastructure caused by the recent floods. He briefed the audience about how the government was redirecting funds from the Public Sector Development Program (PSDP) towards relief efforts undertaken by the National Disaster Management Authority (NDMA).
At the end of the presentation, he highlighted some areas that need immediate attention, including the need for improving agricultural productivity; improving the current account balance by restricting imports and increasing the export base; improving quality of education; and improving economic governance. He further commented that the motto of his government is to “live within our means”.
Following the discussion on macroeconomic challenges, Dr Zaidi asked Dr Ismail to elaborate more on the measures taken by the government to improve tax to GDP ratio, and how it is planning to curb the inflation rate. Commenting on this, Dr Ismail noted that they are trying to impose ad valorem tax on traders, which will provide relief to the small traders. This will give the government a margin to reduce taxes on personal incomes in the future.
This was followed by a very lively Q&A session in which faculty and students asked some hard-hitting questions, criticizing the government’s lack of focus on improving human productivity, climate change, and the contradiction in governments’ policies favoring certain sectors, such as real estate.
In the end, Dr Ismail thanked IBA for providing an opportunity to present his views on the current state of Pakistan’s economy and noted the importance of such discussions to inform people of the steps taken towards fixing the economy.