ISLAMABAD: Caretaker Federal Minister for Finance, Revenue and Economic Affairs Dr Shamshad Akhtar on Wednesday said that effective implementation of bold and ambitious reforms are imperative to usher in a new era of development and prosperity in the country.

“The accomplishment of this goal, however, is contingent upon addressing critical underlying institutional, governance, and structural constraints,” she said at a seminar on: “Pakistan’s Economic Crisis: Challenges and the Way Forward,” organised by Nust Institute of Policy Studies (NIPS) at the university’s main campus.

Dr Akhtar 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 would become even more volatile and extreme in the decades ahead, with an average increase in temperatures by 1.3pc to 4.9pc 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.

The interim minster further said that stressed five critical areas of reforms essential to reducing Pakistan’s vulnerabilities and fostering sustainable growth that 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.

During his talk in the second session of the seminar, the Caretaker Federal Minister of Energy, Power & Petroleum Mohammad Ali talked about the energy crisis and energy sector reforms in Pakistan.

Recognising the interlinked nature of Pakistan’s power and energy challenges, the minister emphasised the need for comprehensive structural reforms as economic activity has collapsed due to import controls, creditworthiness downgrades, and ballooning interest payments.

He said that a strategic approach is needed to meet the country’s energy requirements as Pakistan relies heavily on gas and oil as main sources of energy, while industries and transport consume the largest chunk of the energy produced.

Moderated by Dr Ashfaque Hasan Khan, Director General NIPS, the event attracted diverse participation comprising senior policymakers, dignitaries, government officials, veteran diplomats, development professionals, economic experts, academics, think tank leaders, scholars, and students. retired Lt-Gen Javed Mahmood Bukhari, Rector Nust, also attended the seminar.

Dr Ashfaque also presented an overview of Pakistan’s economic crisis. His insightful lecture provided a broad analysis for addressing the economic challenges faced by developing countries, like Pakistan, in managing their debt burdens. Dr Khan emphasised the reduction in interest rates to reduce expenditure and bring the budget into sustainable balance.

Published in Dawn, January 25th, 2024