Face International Monetary Fund (IMF) with resolve

It is a positive sign that the International Monetary Fund (IMF) has invited Pakistan to discuss its future plans with the Fund. It seems Pakistan has been avoiding facing the Fund because it does not have the strategy to contain freefall of GDP growth rate in the aftermath of floods. However, the situation is not as bleak as being painted by some of the experts. Some of them go to the extent of saying that the country can still achieve around 4 per cent GDP growth rate, though the task is not easy.

It is true that worst hit has been the rural areas but only cotton crop has been affected, that too around 15 per cent. However, a little extra care of the standing crop can still yield up to 13 million bales. The shortfall can be overcome by following two pronged policy that calls for: 1) importing superior quality cotton and 2) avoiding export of raw cotton, yarn and un-processed cloth and achieving higher value addition.

The country can also get bumper wheat, sugarcane and rice crops because of ample availability of water and fertiliser. In fact growers can cultivate sunflower, canola and corn to boost their income. Focusing cultivation of oil seeds can help in reducing edible oil import bill.

Manufacturing sector suffers from a few contentious issues, which can be overcome with the help of proactive approach. The strategy should include ensuring uninterrupted supply of energy products at affordable cost. The Fund must be told clearly that removing subsidies at this juncture will further erode the competitiveness of the manufacturers. However, there is a need to remove subsidies and contain transmission and distribution losses of electricity distribution companies and UFG losses of gas distribution companies.

Financial sector has to shoulder extra burden but the situation can be eased by investing less in government securities and extending more credit to the private sector. Risk of higher lending to agriculture sector can be mitigated through credit insurance in the first phase and comprehensive crop insurance in the second phase. However, the government will have to create a pool to minimise the risk of insurance companies.

Many of the industrial units suffer because of poor capacity utilisation and the most obvious sectors are textiles/clothing, sugar, cement, and refineries. Running the plants at optimum capacities will help in achieving economies of scale, optimisation of cost and above all producing exportable surplus.

The European Union has already indicated to remove duty on 75 products of Pakistan for the next three years. The enhanced market access will remain meaningless unless Pakistani exporters strive for improving quality, optimising of cost of production and abiding terms of delivery.

There are problems and would be numerous. The first step is to kick the habit of self pity and then work things out indigenously rather than looking for a messiah. So help yourself as it takes only you to change your destiny, something that no one else can, not even a super-lender like IMF.