Karachi : Dispelling talks that Pakistan was on the brink of bankruptcy, International Monetary Fund’s (IMF) Resident Mission Chief, Dr Tokhir Mirzoev, on Thursday said that exports may have declined but low oil prices and strong remittances have helped to keep the country’s economy stable.
Addressing a seminar ‘State of the economy and way forward’, held at the University of Karachi’s Applied Economics Research Centre (AERC), the IMF official added that despite the country’s exports standing at just nine percent of the GDP, the rate of inflation and budget deficit of Pakistan had also declined, showing a sign of growth in the economy.
“Pakistan’s current economic growth rate is 4.6 percent, while India leads the region with 7.5 percent. Bangladesh, however, interestingly has a better growth rate, of 6.8 percent, from then of China’s which stands at 6.3 percent,” Dr Mirzoev observed while comparing the country’s economy with the South Asian region’s economy.
According to the official, the tax revenue collection had improved and rose to 11 percent; however, he added that it needed to be at least 20 percent.
Elaborating over the IMF’s US$6.7 billion agreement – signed by Pakistan in 2013 – he said US$5.2 billion dollars had so far been released.
The agreement was signed with an aim to bring about structural reforms in the sectors of energy, tax to GDP ratio, privatisation sector and improving the overall business environment, he mentioned.
The IMF did impose conditions on Pakistan, which include removal of subsidies imposed in the public sector, the IMF official said.
“Pakistan’s foreign debt was around 64 percent of its total GDP, which is not a very concerning ratio, as other states usually have higher debt ratios; however, Pakistan has to take advantage of this significant opportunity of low oil prices by reforming the energy sector.”
Dean Faculty of Social Sciences at KU, Prof Dr Moonis Ahmar, citing the examples of China and India, said the policy of ‘self-reliance’ was pivotal for economic uplift in any country.
He said the tax to GDP ratio and exports had to be increased in order to strengthen our economy as our overall exports amounted to US$25 billion while Bangladesh earned US$25 billion only through exporting garments.
At least 40 percent of the population of Pakistan lives below poverty line which indicates our economic backwardness, Dr Ahmar stated, adding, that the government needed to curtail its expenditures and implement measures for long-term economic growth.
He further called on the concerned institutions to change the country’s policy of dependency on foreign aid and loans.