Summary of Talk by Vaqar Ahmed

1. Programme on Pakistan’s economy
CAPITAL TV, 25 February, 2017
Participants: Ejaz Haider, Vaqar Ahmed, Anjum Altaf, Khurram Hussain
Brief remarks by Vaqar Ahmed
Background:
 The Op-Eds published in US-based papers do a decent job of projecting a good economic
image of Pakistan. Countries rely a lot on such external endorsements to lure foreign
investments
 However thesearticlesare notnecessarilyangled toinform audienceabouttheimmediate
or structural risks to the economy (e.g. why are the foreign exchange reserves falling?
Why are exports falling despite GSP plus and CPEC-related investments? Why is trade
account deficit widening? Why do you need more debt?)
Why are debt levels rising?
 High current expenditures on debt servicing, public administration and law & order
 Losses of public sector entities (e.g. losses in energy generation and distribution
companies)
 Exports and remittances are not providing you with higher levels of foreign exchange
reserves
 Import payments have increased.
Risks under high levels of debt:
 Pakistan may have to go back to IMF for supporting balance of payments
 Continued procurement of short term loans from China at commercial rates
Key structural reforms for 2017-18:
 Consolidation and rationalization of taxes at federal and provincial levels, which in turn
could reduce cost of doing business (tax reform should also include a reduction in
number and rates of anti-poor and regressive withholding taxes and federal indirect
taxes, which will then lower the incidence of poverty across Pakistan)
 Lower debt and borrowing requirements of the government through reduction in:
untargeted and hidden subsidies, grant operations, losses of public sector enterprises,
and scale of government operations in sectors where private sector is more efficient
 Increase public expenditure towards initiatives which boost productivity of agriculture
and industry, in turn improving competitiveness of Pakistani exports.
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