One of the more important moments for the present government came on Tuesday at a meeting of the Export Promotion Board when Prime Minister Shehbaz Sharif, who was chairing the meeting, disclosed the government’s export target for the medium term: doubling them in the next three years, adding $30 billion to the present $30 billion. It could well be argued that the steps ordered taken by Mr Sharif were such as merely worked to improve the efficiency of current exports instead of creating the kind of breakthrough that would be necessary for the achievement of the highly ambitious target. It should be remembered that so far, the government had not given the kind of target for exports that showed it was serious about dealing with the debt trap Pakistan had got into, which required the kind of forex earnings that the targeted growth seems to require.
If indeed the target can be met, then the economy will begin to recover, as export industries will need more and more workers to man its factories, thus leading to the creation of the sorts of jobs that are needed to handle the youth bulge in the population. It should be kept in mind that the IMF, which had taken over the country’s economic policy, in exchange for its aid packages, had not dealt with the issue of economic growth and job creation, nor with the earning of foreign exchange necessary to service its debt. Increasing exports meets both issues, for the consequent economic growth will lead to higher revenues for the government, as well as make it easier for the government to use those revenues to buy the foreign exchange necessary to service that debt.
The devil, as they say, is in the details, and it will be no easy task for the government to increase exports by anywhere near the amount the PM wants. Luckily, Pakistan’s imports are relatively inelastic, which means they will not rise in proportion to increased forex availability. However, the government’s attempts to substitute thermal power (based on imported oil) for locally produced renewables will be key, as the country cannot afford to meet the increased power demand implied by the rise in exports by frittering away its export earnings on fossil fuels.
