Pakistan has been a recipient of IMF bailout package since decades. The number has surely passed a dozen. I mean it has been for decades now that Pakistan financial strategy is to prop up its currency with the aid of borrowed money from friendly countries, asian and/or international organizations.
Once the government enjoy the short lived benefits, they leave the foreign debt and domestic budgetary mess which erodes further the competitive advantage of doing business or investment in Pakistan and this boom and bust cycle of Pakistan economy continues.
It makes no sense in taunting how former governments have mismanaged the resources. The fact of the matter is that PTI is at the helm and needs to come up with a solution and a team that will bring about changes that will break the cycle of boom-n-bust with borrowed money (read how to enhance or grow the revenue reservoir).
I am sure that PTI government has realized that current abysmal economic condition cannot be remedied by loans from arab countries, commercial borrowing, or with overseas Pakistani remittances. It was as clear as a day light that Pakistan will definitely require an IMF program. Now that it has been in the process of approval by the executives (read Trump administration demands to revamp the money transfer mechanisms and butting-out the religio-terrorism organizations), it should be no secret that Pakistan has brought herself to a hard place where following through on typical IMF demands as well as clearing the Afghan-Kashmir proxy mess is the only option.
PTI must speak export, export and export every day. This is the only way to increase the revenue reservoir without creating too much political animosities. I believe, this is what Nawaz wanted to do. But his hands were tied behind his back by military who refused to heed his advice on living in harmony with its neighbors. And to bandage its nefarious-patriotism an endless political instability was unleashed against the sitting government. Transit routes which would have on their own could have generate tens of billions of dollars were blocked in the name of national security. Iranian and Chinese visiting Presidents were ridiculed. Exports with India that could reach upto 30 billion were sabotaged by giving free hand to terrorists to raise Pakistani flag on Red Fort.
So basically, in my view, simple and straight forward opportunities that could have helped Pakistan in building and enhancing its revenue reserves through export and transit routes, were subverted greatly by Military thugs who are now bending over backwards and sticking their head up their backside to comply with International and India’s demands.
Sure IMF demands to expand revenue reservoir through tax collection reforms, privatization of sick-institutes, ending the subsidies and halting the recurring circular debt in energy sector are valid and will greatly contribute in making Pakistan economy healthy but these ills are common in import-led economies. Only a strong political will and consensus based government can bring such reforms. Hand-cuffing and harassing bureaucrat, academics and small business owners will not help in bringing reforms in those areas.
I think PTI government is overwhelmed by the burden of a federal government workings and on top it does not have political credit with national level political parties or constituencies. What it should do is to focus on bringing all and sundry from Agricultural and Industrial sector to the table and make them stakeholders and administrators in developing, implementing and full executing the policy and strategy. Drop all impediments to their business and give them direct support to achieve clear export and quality targets in an agreed time frame.
For example, Pakistan imported some 1.7 million metric ton of soybean from US. In total Pakistan spent USD 1+ billion on importing soybean seeds and related products from US and Brazil in 2018. This despite Pakistan has excellent agricultural conditions for the crop to produce. The opportunity is for PTI government is to work with Pakistan soybean farmers and support them to produce soybean not just for Pakistan but also take advantage of China-US trade war where China has imported only a fraction of its well established USD 14+ billion soybean import with US. Right now China is working with Brazil which is the major producer of Soybean in the world to meet its need. PTI should study how Brazil had leased its lands to Japan in 1980s, to cultivate Soybean for Japanese domestic market. A similar arrangement could see Pakistan and China lock in an exclusive soybean trade worth USD 10+ billion a year.
My understanding is that currently there are three different ministries that govern issuing of export license of Soybean from Pakistan. The administration and bureaucracy is hard at work to not let this process streamline and become transparent for foreign importers. This is one of the reason why China has banned Pakistan soybean.
At any rate, we will be counting the foreign debts and loans unless government start taking action to increase export and use its transit resources for revenue generation. If Kartarpur can be opened why not transit routes between India-Afghanistan-Pakistan.
This reply was modified 3 days, 23 hours ago by Lovelyday.