Pakistan asked to work on sustainable
economic future
Arturo Herrera Gutierrez, Global Director of Governance
Global Practice at the World Bank, emphasized the imperative for Pakistan to
enact sustainable fiscal reforms to ensure a robust economic future based on
global insights.
Speaking at a seminar titled "Sustainable Fiscal Reforms:
International Experience and Applications for Pakistan," organized by the
Pakistan Institute of Development Economics (PIDE) in Islamabad, Gutierrez
underscored Pakistan's pivotal juncture. He stressed that the nation must
choose between fostering sustained economic growth or succumbing to cyclic debt
crises.
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Drawing parallels with historical economic challenges,
particularly in Mexico during the 1980s, Gutierrez elucidated how these past
experiences inform present fiscal strategies. He proposed detailed mechanisms
for Pakistan to circumvent the pitfalls of fiscal mismanagement that have
plagued economies previously.
Gutierrez underscored the urgent need for sustainable fiscal
reforms, emphasizing the establishment of a stable and sustainable debt
trajectory as fundamental for Pakistan's economic stability. He highlighted the
importance of robust macroeconomic frameworks, effective debt management
practices, and institutional setups to enforce fiscal discipline.
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Furthermore, Gutierrez advocated for a comprehensive,
long-term fiscal strategy, stressing that fiscal sustainability entails more
than annual budget balancing. These measures, he emphasized, are essential for
fostering credibility and ensuring access to financial markets, urging
consistency over time to avert past economic pitfalls.
Highlighting the resurgence of global debt distress,
particularly post-COVID-19, Gutierrez urged a reassessment of fiscal
sustainability approaches. He cited examples of countries grappling with high
public debt, including the US, Canada, Japan, and Pakistan, emphasizing that
while debt-to-GDP ratios are significant, the sustainability of fiscal finances
is equally crucial in influencing market dynamics and interest rates.
During the lecture, Gutierrez provided critical insights
into sustainable fiscal policies worldwide, tailoring these strategies to
Pakistan's economic context. In contrast, the PIDE team offered a nuanced
perspective, advocating for comprehensive economic healing rather than
superficial remedies.
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They emphasized placing economic growth at the forefront of
reform efforts, prioritizing expansion over revenue accumulation. Proposing
re-regulation to stimulate economic activity and revenue generation, they
highlighted that the root of the issue lies more in expenditure than revenue,
urging a shift in reform focus.
Both PIDE and the World Bank pledged to continue the reform
discourse through further engagements, reflecting a shared commitment to
enhancing fiscal governance globally. The seminar drew attendance from senior
economists, policymakers, researchers, media personnel, and representatives
from international financial institutions, demonstrating collective interest in
bolstering fiscal governance worldwide.
Source: Business Recorder