Pakistan's economy is showing some positive signs, but there are still several challenges that need to be addressed.
On the positive side, tax collection has exceeded the target for the first two months of the current financial year, and income tax has grown by 41%.
Crop production is also expected to increase significantly, with cotton production estimated to exceed 12 million bales and wheat output anticipated to cross 28 million tons.
Rice exports may also reach a record high of $3 billion during the current financial year.
However, there are still several challenges that need to be addressed, including:
- Exports are underperforming, declining by over 6% in the first two months of the current financial year.
- There are significant problems in the gas sector, including shortages, circular debt, and increasing losses.
- Government expenditure is rising unchecked, and the budget deficit may push beyond 7.5% of GDP.
To address these challenges, the government needs to take urgent measures such as:
- Halting cheap gas supplies to captive power plants and subsidising the fertiliser industry.
- Adopting a weighted average cost of gas (Wacog) to sell local and imported LNG.
- Signing one more long-term contract for the supply of gas and allowing the private sector to build more LNG processing terminals.
- Checking the ballooning expenditure and ensuring that the budget deficit stays within the stipulated target.
The government should also learn from the past experiences and not rely on GSP Plus-type schemes alone to boost exports. Instead, it should focus on greater regional and global integration.
