The Saudi economic delegation is here, and the atmosphere is jubilant. The extent of this jubilation can be measured from the performance of the stock exchange.
The bullish trend was not that strong when the International Monetary Fund (IMF) released the last tranche of $1.1 billion of the Standby Agreement but it broke record when the Saudi delegation set foot on Pakistani soil. This just shows that a loan and investment get different reactions in the financial world.
So finally, things are moving in the right direction. The last installment of the monetary fund has been received, the Saudis have arrived to make investments worth billions and the IMF delegation will also be in town to work on a new loan programme.
Besides, Pakistan and its time-tested friend China have also vowed to enhance cooperation on China-Pakistan Economic Corridor (CPEC) projects.
This resolve was made during the meeting between Foreign Minister Ishaq Dar and vice chairman of the Standing Committee of the National People’s Congress of China Zheng Jianbang in The Gambia. Inflation is easing with wheat flour prices reducing considerably.
The current government seems to be serious in fixing the economy. Prudent policies can only help bring the country out of the economic mess it has been embroiled in during the last few years. Only a year ago, Pakistan was nearing default, with reserves falling to a critical low.
The Standby Agreement signed by the last Pakistan Democratic Movement (PDM) government and the IMF came as a breather and brought it back from the verge of bankruptcy. The only way out from the prevailing mess was bringing investments. Loans are a short-term solution but it is investments and increasing productivity that can set the economic wheel in motion.
There is an urgent need to increase exports and stabilise the dollar rate.
So far the IMF is happy with Pakistan as it has fulfilled its condition. What is now needed is to enhance the tax net and plug the loopholes in the tax collecting system. Only recently, the Federal Board of Revenue (FBR) unearthed sales tax scam amounting to Rs756 billion, leading the board to inform Prime Minister Shehbaz Sharif and lodging 100 FIRs against the culprits.
Therefore corrective measures are required at the top level so that a trickledown effect occurs. The government needs to bring massive reforms to increase its revenue. There is a need to check revenue losses, streamline cash flow through legal means and providing incentives to investors to facilitate more investments.