Stepping into the shoes of its predecessor, the PTI government has resorted to adhoc measures to avert the balance of payment and debt payment crisis. It has been decided to launch Diaspora bonds titled Pakistan Banao Certificates to attract the inflow of foreign capital to shore up the fast depleting reserves and make payment of foreign debt. Four banks will be authorized to sell these bonds on which an interest rate of 6.75 percent will be paid. These bonds will mature after three years. The loans received from friendly countries have eased pressure on foreign reserves which is temporary phenomenon.
When in opposition, the leadership of PTI used to criticize the debt management policy of PML-N government and pleaded to adhere to the provisions of “Fiscal responsibility and debt limitation Act”2005 for which the World Bank and other multilateral donor agencies were also emphasising. There is no difference in the fiscal and monetary policies of the previous and present governments except raising the interest rate to partially restrict the monetary expansion. The previous government acquired short term commercial loans by selling Sukuk and Euro bonds and the incumbent will launch Diaspora bonds.
The solution lies in a viable long term trade policy of increasing exports by exploring new markets. The Foreign Minster Shah Mehmood Quershi had urged the diplomats posted in Pakistani embassies to pursue a vigorous economic diplomacy and facilitate trade relation with countries which are not trading partners of Pakistan as yet. But one crucial fact is ignored that for this job professionally competent commercial councilors and trade ministers have to be posted in our embassies and diplomatic missions.
Pakistan has a great potential of exporting a number of primary commodities and finished goods. Markets can be explored for the exports of rice, wheat flower, sugar and oil seeds like rap seeds and mustard. Different types of fruits including apple, mango, Kino, Malta, Peach, Plum Pear Cherry and Percimen will fetch high value in the foreign markets by virtue of their delicious taste. Malaysia is a potential market for the export of red meat. Proper attention has to be given to enhancing the quantum of exports of marble products and value added gemstones. The exportable goods that consume imported raw material are no longer competitive and raw material producing industry needs to be encouraged.
Edible oil is the second major item of imports because no attention has so far been given to setting up oil extracting refineries from the locally produced oil seeds. Enhancing of regulatory duty on imports of consumers’ goods has not produced the desired result rather it has encouraged their smuggling and flourished black market. Facilitation of import substitution industry is inevitable. Trade bodies were expecting five years trade policy which is yet to be announced. The composition of exports includes agriculture commodities for which the productivity can be enhanced by improving the financial condition of small farmers as technological improvement of the industrial base will take fairly long time.