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Economic flaws of Pakistan

The current government, like all the governments before it, argues that the economy is performing close
to optimal rates while the reality is far from this official statement. The people on the other hand still
remember the decade of growth or the golden era of Field Martial Ayub Khan to be the epitome of the
Pakistani economy. So what is the bird’s eye view of our economy? Is it truly as bad as the general public
believes it to be? Or is it performing as adequately as the government would like us to believe? Or can
Pakistan only prosper under the guidance of the Military Leadership in a Martial Law?

Pakistan’s economy, broadly speaking, can be classified by the characteristics of lower growth rates than
expected, high inflation, inadequate tax collections, fluctuating market conditions, outdated policies,
questionable budget proposals, and a risky economic climate with little stability in growth. Adding more
to our woes are other factors like the clutches of terrorism that has hit our economy hard due to
damage of infrastructure and more importantly the confidence of investors leading to low FDI and even
local investment. The political failures of the governments to implement sound sustainable policies to
end the electricity crisis has run many of our industries to the ground; a lot of industry recently has been
shifting outside of the country to countries like China and even Bangladesh.

It is important to be noted here that in our shift from an agricultural economy to an industrial economy
Pakistan has completely forgotten about its primary sector. In the long run this has caused many of our
industries like the textile industry for example to suffer as it is heavily reliant on the primary sector to
function. No improvements in agricultural methods, lack of knowledge and funds for the farmers and
inadequate governmental policies are causing fluctuations in the price and quality of the cotton
available and is a major contributing factor to the diminishing textile industry of Pakistan.

Still, it would be wrong to say that Pakistan’s economy is not improving. World Bank in its latest report
on April 28, 2016 exclaimed that the Growth rate in 2017 is expected to rise to 4.8. “Pakistan has made
great progress in restoring macroeconomic stability but much more needs to be done to put Pakistan on
a solid, economic growth footing,” said Illango Patchamuthu, World Bank Country Director for Pakistan.
Dr Ashfaque H Khan in his article for The News states that Pakistan requires a broad based macro-
economic reform that encompasses various elements of the Pakistani economy that act as structural
weaknesses to hinder growth.

“A broad-based economic reform agenda must include: i) reforming the tax system and tax
administration; ii) expenditure reform; iii) managing fiscal decentralisation; iv) restructuring and
privatisation of public sector enterprises (PSEs); v) reforming the energy sector; vi) enacting reforms in
the central bank; vii) improving the investment climate and viii) promoting inclusive and sustainable
growth.”

Source/Reference: TheNews.com.pk
Dr Ashfaque H Khan - May 07, 2013