Economists hope govt will now attend to economy

LAHORE: Economists hope now that the political temperatures have cooled down the government would shift its attention to reviving economy. They say that the do nothing and hope for the best approach has put the economy in recession.

Factors including high interest rates, inflation, energy cost, falling exports, falling rupee value and rampant corruption need immediate government attention, economists say.

All these factors are inter related. Reining in inflation, for instance, would lower interest rates and commodity rates. Boosting exports would stabilise the rupee and reduce current account deficit.

Senior economist Naveed Anwar Khan, FCA, says that the type of inflation prevailing in Pakistan could only be controlled through close cooperation with the provincial governments.

He said there is no effective check on prices. The rates of petroleum products, for instance, have declined locally by 30 per cent but the rates of lubricants like engine oil and transmission oil are still at their peak levels because there is no authority to regulate the rates of these items.

Naveed says the retail prices of fruits and vegetables are fixed 30 to 40 per cent higher than their auction price at the fruit and vegetable markets. The federal government, he added, would have to facilitate the provincial governments in eliminating the role of middlemen that engineer high commodity prices.

Certified Public Accountant Asif Ali Shahid says that the central bank has failed to force banks to give realistic interest rates to the depositors that resulted in a drastic reduction in national savings.

He says despite providing low interest rates to the depositors the banks charge high mark up from the entrepreneurs who finally stopped borrowing resulting in low GDP growth.

He says the high banking spread benefited the financial institutions only while the labour intensive industries caved in due to high cost of borrowing rendering large number of workers jobless. He says the banking spread of seven per cent is too high.

Dubai based chartered accountant Faisal Qamar says that though the exports are suffering in other regional economies as well due to global recession, the textile exports from India, China and Bangladesh have increased by five, six and four per cent respectively while that of Pakistan have declined by over eight per cent during the past eight months.

Yunus Kamran, FCA, says that despite constant inflow of borrowed dollars the rupee is losing value. He said the foreign credits would not be available for an indefinite period. He said Pakistan would have to curb its imports and boost exports to ensure a stable currency vital to attract long term foreign investment.

Courtesy: The News