At a meeting to discuss measures to increase exports, Prime Minister Shehbaz Sharif set an export target of $60 billion in the next five years. That is virtually double the $30.7 billion worth of goods exported in the last financial year, and implies an export growth rate of near 20 percent. To keep things in perspective, exports have grown about 10 percent so far, in the first seven months of the current financial year. At the same time, the target may not have been set by potential alone, but the foreign exchange needs of the country for debt servicing. The Prime Minister may have quantified an important part of the country’s economic development plan to provide the missing element of the economic management [;an of the country. The debt trap had made this approach inevitable, for it had been left alone by the IMF, which assumed that an overall improvement in the economy would enable the country to keep servicing its debts.
Pakistan is trapped within a paradox. It not only requires foreign exchange to service its debts, but also pay for essential imports, covering such essentials as fuel, edible oil and pharmaceuticals. This makes the path of import substitution inevitable. One avenue is that of turning to renewables, but the fight over solarization has shown the power of the oil import lobby. The path of increasing exports has one problem: it depends on demand abroad, which in turn depends, among other things, on the policy of the governments of the importing states. As Pakistan can see from US resentment of Chins, success at exporting can earn powerful enemies. Pakistan should understand that it is intended to be a weak economy, its attention fixed on economic progress it cannot achieve because it is mired in a debt trap.
The government must ensure that its economic policies include a political component, so that it does not find itself in the trap that China and Japan find themselves, where their very prosperity allows the USA to loom large on their horizons, Of course, Pakistan is far from that stage and needs to do much more running on the spot to stay in the same place.The policy approach adopted depends on adjustments in tariffs boosting exports. The government will also have to watch IMF efforts to stop this.
