Strengthening Pakistan's Economy: Key Challenges and Solutions
April 26, 2025
External Debt Management to Eliminate the One-Year Duration Debt
Pakistan’s current external debt is about $130 billion or 23 percent of GDP. I believe that the current stabilization program while correctly identifying external debt as a source of vulnerability to the economy does not place any emphasis on retiring the external debt of $12 billion subject to annual roll overs. This type of debt in the form of deposits with the State Bank of Pakistan is due to three countries - China, Saudi Arabia and UAE. In fact, IMF Program policy explicitly counts as a plus factor the securing of these annual roll-overs and suggests that these roll-overs will not happen if the IMF Program is not followed. I strongly urge Pakistan’s Policy makers aim to retire this annually rolled over external debt amount in the next four years i.e. by $3 billion per year. All increased workers remittances currently estimated at about the same amount i.e. $3 billion per year should be utilized for this purpose. This will also enable Pakistan to not be forced automatically into a follow up IMF after the current one expires in 2027.
Productive Sector Structural Reforms Leading to Short and Medium-Term Disruption and Decline
The stabilizations program is currently executing a strategy which well intentioned is resulting in a major re-structuring of the economy without taking into effect its impact on (i) existing production structures (ii) employment and (iii) poverty. The current strategy is leading to both a pre-mature de-industrialisaion in all leading industrial sectors particularly light engineering and also a dismantling of the current production structure of the agricultural economy by forcing the farmers to abandon wheat and rice production without offering an alternate crop production cycle comprising possibly of oil seeds and maize in the winter and millet bajra in the summer. A transition strategy needs to be elaborated and executed for the productive sectors which are proposed to be phased out with protection for potentially competitive infant industries and new internationally competitive agricultural crops.
Disincentives to Urbanization
The current economic policies are discouraging urban sector development by moving property taxation structures to percentage of land value rather than annual rental value and by treating investment in land and real estate by house-holds as a ‘waste’ rather than as a backbone of the economy. This will encourage further capital flight from Pakistan and change urban landscapes into rich people’s enclaves. These policies need to be reversed.
Concentration of Wealth in about 100 families in Pakistan
Pakistan is actively seeking privatization of all its major publicly owned assets (PIA, DISCO’S etc.). There are only about 100 families in Pakistan who possess assets capable of acquiring these to be privatized state assets. These families already 63% of the companies listed on the Pakistan Stock Exchange. Further increased concentration of wealth will have significant implications for Pakistani society. Possible solutions may involve compulsory listing on the stock exchange of all registered companies above a certain financial limit as was the case earlier.
Insufficient Policy on Social Protection
The current stabilization policies have caused a mass increase in poverty with about 40% of the population currently below the poverty line. Earlier this had come down to less than 10 percent below the poverty line before the last two IMF supported stabilization programs were put into place. The current social protection policy focuses entirely on the bottom 10% of Pakistan population comprising of about 6-7 million families. This is inadequate. This should be doubled to size in both coverage to about 15 million families or about 20% of the population and also in amounts disbursed per family to about $1 (Rs.300) per day.
Short-sighted Removal of Incentives to Solar Energy
Finally, I would wish to point out the hesitancy in fully adopting a policy on household generation of solar energy for use in meeting household living and transport requirements. The policy makers are attempting to protect the misdirected investments in power generation based on largely imported oil and gas in which we locked into through long-term contracts. These should be written off with costs to be borne by the Federation and the Provinces jointly through an appropriate constitutional amendment or changes in the NFC award as necessary. There should also be a ban on new dams for power generation.
Labels: Management of Pakistan Economy
posted by S A J Shirazi @ 4/26/2025 09:00:00 AM,
Universiti Malaya Postgraduates on Study Tour to Lahore School of Economics
Labels: Lahore School, Malaysia, Pakistan, Students Exchange Program, Universiti Malaya
posted by S A J Shirazi @ 4/26/2025 08:53:00 AM,
Lahore School of Economics Annual Conference on Management of Pakistan Economy
April 23, 2025
The two-day conference is structured around two broad themes, those of economic growth and trade. Economic growth has revived to 2.5% in 2025 against stagnation across the previous two years. Pakistan has long imported more than it exports, requiring continued reliance on the vagaries of incoming worker remittances and frequent recourse to IMF lending. The conference occurs against a backdrop of an economic slowdown, debt crisis, and a three-year economic stabilization program recently agreed with the IMF.
Labels: Management of Pakistan Economy
posted by S A J Shirazi @ 4/23/2025 11:55:00 AM,
Organizational Behaviour and HRM Practices
April 22, 2025
Labels: Guest Speaker, Spring 25
posted by S A J Shirazi @ 4/22/2025 09:45:00 AM,
Twentieth Conference on Recent Advances in Mathematical Methods, Models and Applications (RAMMMA25)
April 19, 2025
Labels: CMSS, Lahore School, Mathematical Methods, RAMMMA, Research
posted by S A J Shirazi @ 4/19/2025 10:54:00 AM,
Strategic Management
April 17, 2025
Labels: Guest Speaker, Spring 25
posted by S A J Shirazi @ 4/17/2025 11:12:00 AM,
Strategic Management
Labels: Guest Speaker, Spring 25
posted by S A J Shirazi @ 4/17/2025 10:13:00 AM,
Lahore School of Economics Convocation 2025
April 12, 2025
Labels: Convocation
posted by S A J Shirazi @ 4/12/2025 10:52:00 AM,
Trade may be diverted in Pakistan’s favour due to tariffs on BD, Vietnam, China
April 11, 2025
Pakistani economists warn that the newly imposed US tariffs could have a significant impact on Islamabad’s exports. Initially, the effects might be relatively contained, but if the tariffs persist, they could lead to a more substantial decline in exports over time. This potential downturn is attributed to the tariffs’ influence on Pakistan’s trade balance and overall economic performance.
According to a Lahore School of Economics policy paper written by Dr Azam Amjad Chaudhry, Professor and Dean, Faculty of Economics, and Dr Gul Andaman, Teaching and Research Fellow, Innovation and Technology Center, with Bangladesh, Vietnam, and China facing even higher tariffs, there may be some trade diversions in Pakistan’s favour. Moreover, US buyers might negotiate for Pakistani exporters to absorb part of the tariff, further softening the blow to the country’s exports to the US.
Read more »Labels: Dr. Azam Chaudhry, Economy, Export, Global Economy, Import, Lahore School, Pakistan, Research, Tariffs, Trade Division, US
posted by S A J Shirazi @ 4/11/2025 09:11:00 AM,
US tariffs can cost Pakistan $4.2b in 5 years
April 10, 2025
The United States' recent decision to impose a 39% tariff on imports from Pakistan could lead to a significant drop in Pakistan's export revenues, with estimates suggesting a potential decline of up to $0.8 billion in calendar year 2024 alone.
As per a policy note released by the Lahore School of Economics (Lahore School) on Wednesday, over the next five years, this loss could accumulate to as much as $4.22 billion if the full burden of the tariff is passed on to American consumers. However, the actual impact might be less severe if Pakistani exporters absorb part of the tariff cost or negotiate with US buyers to share the burden.
Read more »Labels: Dr. Azam Chaudhry, Economy, Export, Global Economy, Import, Lahore School, Pakistan, Research, Tariffs, Trade Division, US
posted by S A J Shirazi @ 4/10/2025 12:03:00 PM,
Conference on Recent Advances in Mathematical Methods, Models and Applications (RAMMMA25)
April 02, 2025
Program here
Labels: CMSS, Lahore School, Mathematical Methods, RAMMMA, Research
posted by S A J Shirazi @ 4/02/2025 11:02:00 AM,
Pakistan Day 2025
March 23, 2025
The School's Main Campus was abuzz with patriotic spirit as a flag-raising ceremony took place at the picturesque Shumaila Garden. Dr. Shahid Amjad Chaudhry, the Rector of Lahore School of Economics, graced the occasion as the chief guest.
Read more »Labels: Lahore School, Pakistan, Pakistan Day
posted by S A J Shirazi @ 3/23/2025 12:23:00 PM,
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