Pakistan’s economy requires immediate reforms to overcome the challenges because any more delay in initiating much-needed sector-specific reforms would further aggravate the situation.
This was the upshot of the presentation given by the Chief Economist USAID Thomas Morris on the state of Pakistan’s economy here at the Lahore Chamber of Commerce and Industry on Tuesday. The LCCI President Irfan Qaiser Sheikh, Senior Vice President Kashif Younis Meher, Vice President Saeeda Nazar, former Presidents Iftikhar Ali Malik and Mian Muzaffar Ali also spoke on the occasion and threw light on various sectors of economy where Pakistan and the US could work jointly.
The USAID Chief Economist indicated that the country’s fiscal position was fast deteriorating as numbers suggest the gap was widening with every passing day. He highlighted that a major chunk of tax-payers money was being eaten away in defense expenditures, subsidies and interest payments.
After spending huge sums of money on non-development expenditure, the government had left with no money to spend on hard pressing energy shortage and social development. He pointed out that in 2008-09 Pakistan was paying around Rs99,000 million on account of subsidies, but this figure jumped up to Rs284,827 million in 2010-11. He was of the view there was dire need to correct the energy mix of the country as any change in petroleum products prices adversely affect the government’s budgetary estimates.
Thomas Morris pointed out that in 2008-09, the government allocated Rs77,000 million for electricity subsidies, but it had to spend Rs 99,000 millions when oil prices in the international market were below $80. On the other hand, in 2010-11 budget, the government earmarked Rs32,000 million for electricity subsidy, but it had to spend Rs284,827 million as oil prices had crossed $100 per barrel barrier.
He said that the GDP growth would remain 3 per cent contrary to government’s claim of four percent. He said that during the global recession Pakistan’s economy remained positive which shows its strength. Therefore, he said that the government should focus on curtailing expenditure by cutting non-development expenses. He said that Pakistan should further strengthen its economic relations with the United States by signing new trade agreements.
Talking about Agriculture sector, the USAID Chief Economist said that agriculture sector in Pakistan is constrained by insufficient investment over many years as its share in the GDP in 1960 was 46.2 percent and in 2010 it was only 20.8 percent.
Speaking on the occasion, the LCCI President said that the Lahore Chamber of Commerce and Industry was ready to collaborate with USAID in carrying out projects in energy sector for the sake of economy and in the best interest of Pakistan and its nationals.
About the condition applied by US Congress Committee to link economic and military aid to NATO supply resumption, the LCCI President said that it is not justified considering the present situation of Pakistan which has already suffered losses of well over $ 65 billion due to its frontline role in war against terror.
Irfan Qaiser Sheikh said that the role of USAID in various sectors ranging from energy, education, health, humanitarian assistance and etc., needs to be expanded to more areas and with wider scope.
Uncle Sam apprehensive about his favourite nephew
