January 19, 2024 (MLN): To reduce Pakistan’s vulnerabilities and foster sustainable growth, a comprehensive overhaul of the government’s fiscal apparatus is necessary to lower the revenue-expenditure gap, Dr. Shamshad Akhtar, the Caretaker Federal Minister for Finance stated during the keynote address on Pakistan's economic challenges and the way forward.
She further emphasized that bold reforms would lead to a new era of development and prosperity in the country.
Moreover, effective implementation of ambitious reforms will depend on addressing critical underlying institutional, governance, and structural constraints.
She highlighted five key areas that have increased the vulnerability of Pakistan’s economy to domestic and global shocks: first, unsustainable fiscal policy due to revenue gaps and unproductive expenditure.
Second, fiscal unsustainability has enhanced government recourse to public debt which has increased.
Third, climate shocks as the global warming model predicts that Pakistan’s weather patterns will become even more volatile and extreme in the decades ahead, with an average increase in temperatures by 1.3% to 4.9% by 2090.
Fourth, the lack of innovation and diversity in the structure of the economy, and fifth, the failure to integrate Pakistan’s economy with the rest of the world.
Dr. Shamshad further stressed five critical areas of reforms essential to reducing Pakistan’s vulnerabilities and fostering sustainable growth.
These areas included; a comprehensive overhaul of the government’s fiscal apparatus necessary to lower the revenue-expenditure gap; addressing structural weaknesses of SOEs and improving their efficiency and functioning, reducing the debt burden; and enhancing competitiveness and encouraging new investments.
