Today we will try to get answer of Can we Bridge the Trade & Budget Deficit? Pakistan has a trade deficit of 133%. Looking at the type of imports. There are two categories which make 90% of total imports. Oil,lubricants & chemicals constitute approx 40% of total imports. Surprisingly edible oil, fruits, vegetables, manufactured/processed food items combined constitute 50% of total imports.
A country like Pakistan, which has around 368k sq km of arable land- has to import fruits, vegetables and edible oil. Why do we need to import fruits like apples from New Zealand, Live animals from Australia, grapes from Africa, dates from middle east, edible oil from Malaysia & Indonesia, vegetables from India, manufactured/processed food products like high end exotic chocolates and cookies from Switzerland & other EU countries?
Why can’t we levy import ban on products like luxury cars, exotic food items, live animals, animals feed (cat & dog food). All those products which either are available in Pakistan or which is consumed by 5% of Pakistani population- should be banned from being imported. People who use luxury cars or eat Swiss chocolates can very easily travel to Switzerland during summers to enjoy their chocolates & ride luxury cars.
On the other hand, Pakistan is already producing apples, grapes and dates. There is no need to import these fruits. We should focus on improving production of vegetables, fruits and edible oil. Pakistan is blessed with wonderful & fertile land- Govt should be focusing on facilitating farmers and extensing softer loans to set up agro based industry. This is where we should attract FDI too.
Cutting non-Development expenditures needs to be the priority. Pak is spending approx PKR 450 Bn annually on pensions. We do not have any pension funds investment programme to fund paying pension. The entire amount is paid out of current account. The speed at which pensions liability is increasing- in few years this will be the biggest annual liability- especially considering the fact now life expectancy has improved by 15 years as it was 70 years ago. We need to involve private sector pensions fund managers on urgent basis to invest & make money with pensions funds to pay off pensions- Like is done in normal world in financial services industry.
Keeping in view the population growth, we need food & agricultural products to feed the nation. We cannot rely on importing these items. Canola and olives should be planted. Locust attacks should be taken seriously. We should have a clear headed strategy to increase agricultural produce over the next 10 years.
Every country has its own dynamics. We, as a nation should encourage youth, support & fund them to set up entrepreneurial ventures related to agriculture, technology, fintech and market accessibility.
With oil prices hitting rock bottom. We should utilize all resources to ensure to secure contracts on prevailing oil prices (ensuring supply chain is another challenge for the current Govt though)
(Written by:Tahir Ruf )
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