Pakistan’s economy is currently facing with multi-dimensional economic challenges that include slower economic growth, rising inflation and unemployment, large fiscal deficit, growing public and external debts. Since the Federal Govt. has presented the annual budget for the fiscal year 2023-2024 on 9th June 2023, and total budget for the fiscal year 2023-24 of PKR 14.46 Trillion has been passed in the parliament, the government aspires to achieve a GDP growth rate of 3.5 per cent, whereas inflation has been anticipated at approximately 21 per cent for the same period. The economic crisis in Pakistan is deepening, showing no signs of an imminent recovery and sustainable growth. The country is coping with severe financial strain, characterized by the least reserves, escalating public debt, record inflation and a rapidly depreciating currency. Against the backdrop of this economic disintegration, political uncertainty, and forthcoming elections, the budget aims to resolve all complications to restore IMF program.
Barter Trade Opportunities
Pakistan has approved barter trade with Iran, Afghanistan, and Russia to stabilize its economy and reduce the country’s dependence on dollar trade. According to the Ministry of Commerce, the Barter Trade mechanism will allow public and private entities to enter into goods against goods trade agreements with all three countries. “Trade of goods under a barter trade arrangement” shall be allowed on the principle of import followed by export. The export would be made to the extent of the value of imported goods, subject to the estimated price mechanism. The decision is aimed at conserving dollars amid its fragile economy. All three countries have welcomed the trade agreements. By engaging in barter trade with Iran and Russia, Pakistan can access goods and services it needs without having to depend on the U.S. dollar for transactions. That could increase Pakistan’s overall volume of trade with regional countries by providing a more efficient way to exchange goods and services without relying on cash transactions. It is very encouraging according to the reports that until now the trade between Pakistan and Russia has reached 705.60 Million Dollars. Furthermore, Barter Trader will enable Pakistan to eliminate barriers resulting from a lack of banking relationships with Iran and Russia. This is especially important since Pakistan plans to shift a large part of its oil imports to Russia. We should wish if Russia-Ukraine war can come to an end with some amicable settlements and our newly established ties with Russia may not be got affected.
Smuggling must be contained
Smuggling across Pakistan’s borders with Iran and Afghanistan is going on at a massive scale. Much foreign exchange is lost to this illegal trade. According to the reports, smuggled Iranian Oil has captured 25-30 percent of Pakistan’s diesel market. The smuggling of fertilizer, sugar, and wheat to Iran and Afghanistan has become another problem for Pakistan. The Afghan Taliban’s ban on Pakistan’s rupee as legal tender in Afghanistan has contributed to this smuggling problem, which has forced exporters to trade in dollars. By reducing the costs associated with traditional trade, the barter system can reduce smuggling and it could emerge as an attractive option to traders with respective countries.
Govt. Big Economic Decisions To Constitute Different Competent Committees Under Economic Revival Plan.
Special Investment Facilitation Council (SIFC)
Prime Minister has approved the establishment of “Special Investment Facilitation Council” (SIFC) under Economic Revival Plan and same has been constituted with country’s highest officials to attract investment into the country. The council has been further encompassed with three Committees namely Apex Committee, Executive Committee and Implementation Committee. The council will work on attracting investment especially from the Gulf Countries. As per plan, the SIFC will serve as a ‘Single Window’ for multi-domain cooperation in ‘Relevant Fields’ with Gulf Cooperation Council (GCC) countries in particular and other countries in general, aiming to facilitate investment and to create conducive environment for investment and privatization.
The Council will foster synergy between the federal and provincial governments, facilitate timely decision-making, avoid duplication of efforts, and ensure swift project implementation.
The significant participation of federal and provincial governments demonstrates the national commitment to reviving the economy against all irritations The Chief of Army Staff (COAS), has assured Pakistan Army’s full support to complement the government’s endeavors for the Economic Revival Plan. The COAS has been included by special invitation in this highest Apex Committee for economic revival. The SIFC will also work towards improving the ease of doing business by overcoming systemic and bureaucratic hurdles and expediting investment and project implementation. To monitor the sector wise implementation, the Apex Committee, Executive Committee, and Implementation Committee will hold quarterly, monthly, and fortnightly meetings.
The Apex committee is the highest Committee chaired by the Prime Minister which includes the Prime Minister, Provincial Chief Ministers, and Ministers for Planning, Finance, IT, Food Security, Water & Power and Industries.
The Executive committee of the SIFC has representation from both civil and military leadership.
The Executive Committee includes the Federal Minister for Planning, Defense, IT and Power and State Minister for Petroleum and Finance. It will include the Provincial Ministers for Agriculture, Mines, IT, Energy, Revenue, Planning and Investment. It will also include the Provincial Chief Ministers.
Implementation Committee will include a Special Assistant to Prime Minister, Director General from the Army and a Secretary of the SIFC secretariat. The government of Pakistan has devised a plan to attract investment from Gulf Cooperation Council (GCC) countries as part of the ‘Economic Revival Plan’. The executive committee will have eight members, including representatives from the Pakistan Army. Additionally, the implementation committee will comprise five members from both civilian and military leadership and coopted members will include the Secretary of Finance, Secretary of Board of Investment, Secretary of Economic Affairs Division (EAD), Chairman of the Federal Board of Revenue (FBR).