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Only a technocrat govt can bring reforms in Pakistan: M. Ali Tabba

Only a technocrat govt can bring reforms in Pakistan: M. Ali Tabba
Only a technocrat govt can bring reforms in Pakistan: M. Ali Tabba
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June 14, 2022 (MLN): Pakistan is a bankrupt country, only a neutral or technocrat government for 3 to 5 years can bring reforms to the country, Lucky Cement CEO, M. Ali Tabba said while giving an interview to a business journalist Farooq Baloch on how to save Pakistan economy.

“We need to accept this Pakistan is a bankrupt country. The question is how many years you can run this country by taking debts.”

The solution is to bring a neutral or technocrat government for 2 to 5 years who can take unpopular decisions to bring reforms for sustainability.

During an interview session, he said that a technocrat government will make difficult decisions because the political government cannot make such moves. “Policy makers are industrialists, landlords they are linked with this windfall profits who are sitting in parliament”.

With regards to growth, he said that a 5% GDP growth target for FY23 is unlikely to achieve, in addition, an inflation target of 11.5% is also unlikely to achieve due to the commodity super cycle worldwide which will increase inflation to 16% to 17% in FY23.

“Pakistan cannot achieve GDP growth more than 2% to 2.5% in FY23”, he said.

Pakistan is a country where the population is growing at 2.2% but all the resources such as water, gas reserves, and agriculture resources are depleting very fast.

“The main issue is we don’t have enough foreign exchange earnings”

Exports, remittances, and FDIs are the three main sources of foreign exchange earnings. When those three don’t bring in 80-90 billion dollars a year, Pakistan can not achieve sustainable growth, he said. The current remittances and exports stood at about 60-63 billion dollars, so additional 17 billion dollars in foreign earnings are required to sustain.

“Until you don’t achieve this, you would keep compromising your growth and wouldn’t go for sustainable growth”

During an interview, he kept emphasizing tax reforms which are a basic necessity to bring a big chunk of informal wealth into the tax net.

“In Pakistan when you are in contraction you keep on adding more tax to the existing taxpayers”

Without tax reforms, Pakistan cannot achieve sustainable growth. The government provides stimulus for the economy to grow that creates a current account deficit. This model is not working for Pakistan and is becoming difficult for the country to sustain given that foreign debt obligations and debt servicing are rising in dollars.

“You will have to take the unpopular decision. Unless you don’t increase your earnings you should not push for growth.”

 

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Posted on: 2022-06-14T10:15:09+05:00

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