National consensus on economy needed

KARACHI: As Pakistan has achieved relative macroeconomic stability, now is the time to build a national consensus on the economy, the Pakistan Business Council (PBC) said on Monday.

Such a consensus would help undertake fundamental reforms and develop a policy framework which can be deployed consistently, no matter who is in power, according to a short paper prepared by the council.

The PBC is a business policy advocacy platform. Its members, all from the private sector, are engaged in 13 important sectors of manufacturing and services, and include 22 multinationals.

Highlighting some of the positives achieved by the Pakistan economy, the PBC said the country’s GDP growth in the previous fiscal year was the highest in eight years, borrowing costs are the lowest in 42 years and inflation is the lowest in 10 years. Besides, foreign exchange reserves have risen and Standard & Poor’s has rerated Pakistan from “B minus” to “B”.

At the same time, “there is a risk of complacency setting into economic management” and the government may be tempted to take populist measures as general elections are a little over a year away, it said. This means the current economic stability can easily dissipate.

Therefore, “governance and policy reforms in all sectors of the economy are imperative if the country is looking to prevent a systemic collapse,” the PBC said.

Furthermore, Pakistan does not fare well in any of the major global rankings — ease of doing business (rank: 144), human capital (118), global competitiveness (122), etc — compared to its neighbours. And while the country’s GDP growth at 4.7pc is better than the recent past, it does not compare well to India’s 7.57pc and Bangladesh’s 6.55pc.

“The trade gap is growing despite the low oil import bill, exports now represent less than 50pc of imports, remittances are vulnerable and external borrowing has mushroomed,” it added.

The PBC paper identified four broad themes that impact the economy and businesses in Pakistan, namely fragmentation of authority (which creates complexity for business), a widely held perception that “profit” is not good, neglect of domestic industry, and FBR’s capacity and discretionary powers.

Published in Dawn November 29th, 2016 Click Here