LAHORE: “Even before the pandemic, Pakistan had 60 million unemployed. Covid-19 has added an estimated 20 million more," said former Finance Minister Sartaj Aziz in his comments at an online conference held Wednesday under the aegis of Institute for Policy Reforms.
Aziz said that there should be a comprehensive Corona Revival Plan. He said agriculture needed special attention because it is the economy's backbone. He highlighted the need for a water policy and better water management. The textile sector was dependent on cotton. And we must have policies and incentives to move to higher end farm products, He said that high interest rates harm the economy. SMEs are important. They employ a large number of people. SMEs must get more credit. As yet, government has not announced support for the informal sector, small vendors, and traders. They have a large share in the GDP and must get support.
In his comments, former federal commerce minister Humayun Akhtar Khan said, “We have pursued stability for decades with no success. We should now think in terms of growth and exports." It is no surprise that economic reforms move one step forward and two steps back.
Humayun Khan said that the budget is important if it is part of a larger strategy of growth. “Fifty years of focus on stability and austerity has left us with no strategy for growth." He urged that the coming budget should be people friendly and government's priority should be health workers. The budget must support businesses whether they are small or large. There is a global recession and liquidity squeeze. Yet there is no national debate on health and economic issues.
He also said that savings and investment have fallen, with exports down to 4 percent up to April 2020. Interest rate was kept high to attract ‘hot money', which disappeared at the first sign of rate correction. He said economic recovery is not possible without putting the health challenge behind us.
Khan suggested that government should support those who lost their jobs and provide concessional financing and liberal support to businesses.
CEO Pakistan Business Council, Ehsan Malik said that Covid-19 is an opportunity to revisit economic policy making and develop a national economic plan with broad consensus. Government must prioritise welfare of the common man with food and basic supplies and services.
Malik said that to revive industry, taxes must comedown and firms must receive incentives. At a time when world demand has shrunk, we must focus on the domestic market. He referred to a large number of tax and regulatory measures that deter growth of industry and are barriers to new entrants. Government must review tax structure and rates.
Internationally known economic expert and former Commerce Minister Dr Zubair Khan said GoP's pandemic response shows a lack of understanding of issues with emphasis entirely on tax collection. This year's budget must have a new approach. It should not have new taxes. “Let the private sector breathe he said. We can help the people with more jobs, which private sector growth will create.
Zubair reminded that the economic health of the country was weak even before the pandemic. The economic indicators were not positive which includes high fiscal deficit, high interest rate and exchange rates. He said that macroeconomic issues largely stayed unattended, with no fiscal adjustment.
Eminent expert and LUMS Professor Dr Bari said that reforms are needed at the micro level, whereas the policy space focuses on the macro. We must rethink the role of government so that they have greater role in education and health service to the people.
Dr Bari said it was not the question of lack of funds it's a question of priorities. “We prefer road projects over schools and hospitals," he said.
In his opinion reliance on private education has risks. He said schools are closed due to Covid-19 in this situation it is difficult for the low cost private schools to sustain. That is why government's role in social services is paramount. We must reach out to over 20 million out of school children.
Dr Bari was of the view that Pakistan must draw a lesson form the industrial economies who educated their people even when they were developing.