Finance Minister Miftah Ismail told a webinar on National Dialogue on the Economy: The Way Forwartd’ that the country needed $36-37 billion to service its debt. That the figure should be so high is not surprising, and should illustrate the magnitude of the debt trap the country is in. This does not include the country’s other foreign exchange needs, such as to pay for imports of goods and services. It is perhaps no wonder that Dr Ismail and his government are so anxious to do a deal with the IMF, not just for the money it would bring, but also because it would open up other sources of borrowing. However, all of that money would not suffice for Pakistan’s needs. The country will find it necessary to approach the money markets for financing, in the shape of fresh bond issues, as well as issuing new sukuks. Not that this is sustainable, but it is also unhealthy, which means that some out-of-the-box thinking is required.
Actually, it isn’t. Pakistan must learn to sell to the world more than it buys, which most certainly does not mean relying on remittances by expatriate workers. Though all sources must be explored, obtaining Foreign Direct Investment (FDI) must be encouraged. In fact, it is not clear why there is not more. Pakistan being the fifth most populous country, it is a huge market. That is yet to discuss other advantages, which include rich and varied resources, and a young population. However, there are also many disadvantages, most of which can be ascribed to the government.
Not only Dr Ismail, but also his predecessor, Mr Shaukat Tarin, told the webinar that the country needed a Charter of the Economy, so as to assure foreign investors especially, that political stability would be maintained, and that economic policies would not swing wildly with the change in governments, with parties ensuring the decisions reached by predecessors were not reversed, and that policies remained the same. As for other problems, political stability was essential, political axes must not be ground at the expense of the economy. It is instructive at this juncture to remember that foreign corporations, which bring in foreign direct investment, are never as politically as intrusive as their governments, and they only involve those governments when theft feel they are being exploited by the home government. There are huge number of measures that can be taken, including the effect on the fuel import bill of switching over to renewables like solar, wind and hydel.
