Shamshad Akhtar Identifies Five Critical Areas Exposing Economic Vulnerabilities

Islamabad: Dr. Shamshad Akhtar, the interim Finance Minister, emphasized on Thursday that Pakistan is facing increased vulnerability, primarily attributed to a rise in public debt, climate-related shocks, and a dearth of innovation and technology.

Addressing a national seminar at NUST titled "Pakistan’s Economic Crisis: Challenges and the Way Forward," Akhtar underscored the urgent need for a comprehensive revamp of the government's fiscal framework to narrow the revenue-expenditure gap.

She asserted that bold reforms are crucial for ushering in a new era of development and prosperity. The successful implementation of these reforms, she added, hinges on addressing fundamental institutional, governance, and structural constraints.

Dr. Akhtar highlighted that the country's vulnerability has grown due to escalating public debt and continuous breaches of the Fiscal Responsibility Debt Limitation Act since 2013. She pointed out that persistent fiscal and trade deficits spanning two decades have rendered the country unsustainable, with the costs of debt servicing witnessing a significant upswing.

Climate shocks, as indicated by moderate weather predictions, present another vulnerability for Pakistan. Dr. Akhtar noted that the country's weather patterns are expected to become more volatile, and the lack of innovation and technology further compounds these challenges.

In a statement from the Finance Ministry, she outlined five key areas amplifying Pakistan's economic vulnerability to both domestic and global shocks. These include an unsustainable fiscal policy marked by revenue gaps and unproductive expenditure, increased reliance on public debt due to fiscal unsustainability, climate shocks exacerbated by global warming predictions, a lack of innovation and diversity in the economy's structure, and failure to integrate Pakistan's economy globally.

Dr. Shamshad emphasized five critical areas for essential reforms to mitigate Pakistan's vulnerabilities and promote sustainable growth. These encompass a comprehensive overhaul of the government's fiscal apparatus to reduce the revenue-expenditure gap, address structural weaknesses in State-Owned Enterprises (SOEs), reduce the debt burden, enhance competitiveness, and encourage new investments.