‘We’re desperately poor,’ ex Pakistan finance minister on country’s economic crisis
New Delhi: Pakistan’s economic problems stem from its “ineffective governance”, poor education and unsatisfactory law and order, the country’s former finance minister Miftah Ismail said in a webinar Wednesday.
Ismail also said Pakistan has done nothing in the last 20 years to enforce population control, unlike other Islamic societies like Bangladesh, Tunisia and Iran.
The former minister was speaking at a webinar titled “Pakistan Economic Crisis”, which was organised by the Brookings Institution. Pakistani-American economist Atif Mian also participated in the event, discussing the roots of Pakistan’s challenges and the future of its economy.
“This country has done nothing in the last 20 years for population control,” Ismail said.
“In terms of our competitiveness, our exports to GDP has been going down since the last 20 years. It was 16 percent, now it’s 9 percent,” he said.
Pakistan is currently in dire straits, due to a crisis in balance of payments and high external debt. Inflation has risen to a 48-year high and the government is in talks with the International Monetary Fund (IMF) for a bailout.
Asked why seeking IMF bailouts was a recurring phenomenon for Pakistan, Ismail attributed it to “ineffective governance”, poverty and poor education.
“I think about 60 percent of Pakistanis have families earning less than 40,000 rupees per month. We are desperately poor,” he said.
Incidentally, the IMF on Thursday rejected Islamabad’s proposed circular debt management plan and instead urged authorities to hike electricity tariff to prevent losses in the cash-strapped power sector.
‘Can’t export IT services like India’
Ismail said Pakistan’s poor education system was behind its inability to export IT services like India.
“We can’t compete with the rest of the world and we aren’t training the youth. So many Pakistanis bemoan the fact that we can’t export IT whereas a lot of IT is exported from India – about $150 billion or so and we have maybe $2-3 billion,” he said. This is because Pakistan does not have “good universities and schools teaching IT”, he added.
Pakistan’s foreign exchange reserves have so far plunged to approximately $4.3 billion, the lowest since 2014.
‘Economic costs of war in Afghanistan’
According to Ismail, the Pakistani government should focus on joining the IMF programme to avoid default, after which it should come up with ways to increase forex reserves through export growth.
“Every year, we will have to return $25 billion to foreigners. So far, what we do is borrow from Country A to return to Country B. This can’t go on. We have to come up with ways to earn foreign exchange and I know of nothing else than increasing exports,” he said.
He pointed out how the law and order situation in Pakistan has posed a hindrance to foreign direct investment (FDI) and export growth.
“If you don’t have foreigners coming to Pakistan, how can you get FDI and export? We’ve had problems with law and order for the last 20 to 25 years,” he said.
He added the war in Afghanistan had also harmed Pakistan’s economic growth.
“Bangladesh and India are not Afghanistan’s immediate neighbours. But the effect of the war in Afghanistan has really been very pernicious on Pakistan. When we went into these wars we thought, ‘Okay, Western countries will write off our debts’. But these things have cost us a lot in terms of our economic growth,” he said.
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