PBC’s Charter of Economy

As Pakistan makes steady progress to deal with the effects of the Covid crisis and as the economy starts showing signs of recovery, it is tempting to assume that, going forward, “business as usual” can safely be relied upon to restore the country’s solvency and its standing in the world. There are indeed several positives. The security conditions are now perhaps the best in recent decades; power shut downs are a thing of the past; flight of capital abroad is largely addressed; leakage from the formal economy into unproductive hoarding of land has been checked and there are even signs of some flowback; The Rupee is competitive; borrowing costs are down; jobs have been saved due to the proactive action of the State Bank; some tax refunds have been released; import tariffs on industrial inputs are being cascaded to promote manufacturing; remittances are up and the low-cost housing initiative is promising. The government deserves credit for managing the twin fallouts of Covid – health and economy, even if the threat of a resurgence still looms.

Welcome as the above developments are, to sustain the economy, the task of addressing the fundamental issues remain. Pakistan is, by most accounts, the “sick man” of South Asia. Per capita earning of Pakistanis has slipped to the lowest in the sub-continent. Despite an agriculture base, 40% of our children are stunted. The pandemic exposed the critical shortfalls in our healthcare. 44% of children do not attend school regularly. The majority that do, receive mediocre education. Large parts of major cities are slums, lacking basic utilities, including safe drinking water. An estimated 5 Mn people are unemployed and we struggle to find jobs for the 2 Mn that reach the age of employment each year. The country has deindustrialized prematurely. We have lost share of world exports. The economy is consumption based, reliant on imports even for basic goods. Pakistan suffers from one of the highest electricity tariffs in the world. It also has one of the lowest productivity rates. Our agriculture is in poor state. Not only are food shortages leading to an unbearable burden of inflation, unchecked, they threaten food security.

Recurring external account crises have compromised the country’s economic autonomy. A bloated and ineffective
bureaucracy tries to impose colonial era regulations on a small formal sector. Successive government have failed to broaden the tax base. Existing tax payers carry a disproportionate burden. Billions in tax refunds, rebates and duty draw backs are owed to exporters and other businesses. For paucity of funds, the state fails to meet its obligations to improve the quality of life of its citizens.

A reviving economy provides the valuable opportunity for key stakeholders to come together on a single platform to agree the ways and means to sustain it. In articulating this Charter of Economy, the Pakistan Business Council focuses on five major thrusts:

• Lift the standard of living of the vast majority of population in the low to middle-income strata
• Fix the state of our agriculture to provide food security and protect people from inflation
• Reverse the premature deindustrialization through a “Make-in-Pakistan” approach to promote jobs, value-added exports and import substitution. Reskill for the future.
• Formalize the economy, deregulate, transform the civil service and reform the NAB law

In sections that follow, the Pakistan Business Council aims to unite all stakeholders on a common platform to arrest the steady decline in people’s living standards and to put the economy on a sustainable growth trajectory. There are no short-cuts or quick-fix solutions available. The earliest a consensus can be developed, the better it would be for Pakistan.