Pakistan's new government faces tough challenges, warn economists
Apr 11, 2022
Islamabad [Pakistan], April 11 : Economists have warned that rising inflation would pose a major challenge for Pakistan's incoming government and it would have to reverse so-called relief measures announced by the Imran Khan government.
Dr Abid Qaiyum Suleri, Executive Director at Sustainable Development Policy Institute (SDPI) noted that it would be hard for the incoming government for taking stringent measures because they had come into power after doing the "Manghai Makao March".
Dr Aqdas Afzal, Professor of Economics at Habib University, Karachi, said that the economy was in a precarious situation because the current account deficit rose sharply and it might touch USD 21 billion, the highest ever in the country's history, reported The News International.
The Professor pointed out that the major challenge would be the account deficit for the economy. He added that the new regime would have to convince the International Monetary Fund (IMF) for obtaining fiscal space to take corrective measures.
He suggested, they would have to increase the POL prices so inflation might go up further.
Touching upon the debilitating foreign reserves of Pakistan, Dr Khaqan Najeeb, former Adviser, Ministry of Finance, said Pakistan must address the challenges facing the external sector.
The country needs to build its foreign exchange reserves, which have declined to a low of USD 11.3 billion dollars. The former adviser mentioned that Pakistan's new government must pursue Chinese rollover of funds and the government must actively engage with bilateral and multilateral partners for increased funding, reported the media outlet.
On the energy side as well, Dr Khaqan expressed concern, especially about the need to ensure uninterrupted fuel supply for the power sector considering the rising financial needs of the energy sector in the summertime. He concluded while noting that the new government would also need to do away with amnesty in the Budget 2023.
