ISSI Hosts Public Talk On 'Stabilizing Pakistan's Economy'

The Centre for Strategic Perspectives (CSP) at the Institute of Strategic Studies Islamabad (ISSI) on Wednesday organized a Public Talk on 'Stabilizing Pakistan's Economy'

ISLAMABAD, (UrduPoint / Pakistan Point News - 21st Feb, 2024) The Centre for Strategic Perspectives (CSP) at the Institute of Strategic Studies Islamabad (ISSI) on Wednesday organized a Public Talk on 'Stabilizing Pakistan's Economy'.

The guest speaker at the event was Mueen Afzal, former Secretary General Finance and Economic Affairs.

Director CSP Dr Neelum Nigar, in her introductory remarks, emphasized the significance of the talk, saying the national economy had faced severe macroeconomic imbalances, with the recurring balance of payments crises, shortages of foreign exchange, and above all a lot of fiscal indiscipline.

"The economy has not been able to take off even with the series of financial stimuli provided by international financial institutions. This underscores the necessity to comprehend the fundamental aspects of the economy, allowing us to present practical policy recommendations," she stressed.

ISSI Director General Ambassador Sohail Mahmood highlighted the significant economic challenges that Pakistan is currently facing, fostered by both internal and external factors, including the impact of global economic slow-down, Covid-19 pandemic, and food and fuel crises in the wake of Russia-Ukraine conflict and situation in the middle East.

He noted that Pakistan was grappling with a dual deficit challenge, involving both fiscal and current accounts, ultimately leading to a debt trap.

Furthermore, he said, the economy was confronted with rising inflation, food insecurity, energy crisis, and unemployment, adding to the already formidable set of challenges. "These hurdles have hindered the nation's path to achieving sustainable growth," he added.

Ambassador Sohail said that the implementation of necessary corrective measures, including redirection of resources toward social sectors, had been hindered by fiscal constraints, also resulting in a sluggish GDP growth rate to stabilize the economy.

"A comprehensive but targeted approach is imperative, entailing sustained long-term growth through structural adjustments within the economic framework," he added.

Mueen Afzal shed light on the recent challenges confronting the Pakistani economy. He attributed the country's economic woes to the misallocation of human resources.

He emphasized that while economic crises were surmountable, they necessitated a rigorous reform process.

He highlighted the potential benefits of investments like CPEC, stressing that they must be utilized prudently. He argued that stabilizing the economy relied on attaining sustainable growth, necessitating a minimum GDP growth rate of around 5 percent.

Specifically, he stressed combating poverty and inequality; fiscal discipline; increasing savings and revenues; responsible management of debt; trade diversification; conducive environment for FDI; structural reforms; and, above all, ‘sensible decisions.’

He underscored that the foremost concern presently was the escalating inflation, which impacted both exchange rates and interest rates.

Mueen Afzal addressed the recurring challenge of the balance of payments, advocating for a strategic focus on trade policies and diversification of exports as imperative solutions.

A manageable current account balance, he noted, was vital for maintaining a stable rupee, a prerequisite for sustainable growth.

He concluded that "Pakistan's public spending is limited, remaining below 20 percent. This limitation hinders investment in crucial public infrastructure, further worsening inequality within the nation."

Following the presentation, participants engaged in an interactive discussion.

The event concluded with a vote of thanks by ISSI Chairman Ambassador Khalid Mahmood.