For a country to be among the top ten countries in the world in terms of population, and with more than 60 percent of its population below 30 years of age, to have such a low GDP per capita, or average income per person, and where one-third of the country falls below the poverty line, along with weak economic institutional quality is a strong reason for concern. In addition, the country is also among the top ten climate challenged countries, not to mention the high association of climate change with the ‘Pandemicene’ phenomenon.

At the same time, the fast-unfolding climate change crisis has been producing strong negative consequences in the shape of heat waves, crop patterns and yields, and most importantly inducing poor air quality in terms of creating serious smog related issue all year long in many parts of the country, especially in winters, and where poor quality of petroleum, along with little forest cover being the main reasons for accentuating climate change in the first place.

Also, overboard application of austerity – both in terms of fiscal- and monetary austerity – policies has been employed to curtail aggregate demand excessively, rather than removing the supply-side bottlenecks to control inflation, and also increase domestic production, exports, and employment levels. Higher exports, and better import-side administrative controls, in turn, help keep current account sustainable.

Moreover, reined-in austerity policies enable better debt management, leave larger fiscal space mainly due to lower interest payments, which brings greater margin for government to introduce counter-cyclical policies. In an environment of low economic growth situation, which has been the case for Pakistan for some years now, means lowering taxes, and enhancing expenditures that overall help increase economic growth. Also, lower interest payment would also generate lesser need for downward revision of development expenditure in an overall effort to reach primary surplus, which being one of the conditionalities under the ongoing International Monetary Fund (IMF) programme.

At the same time, foreign portfolio investment (FPI) is not lured with keeping interest rates on the higher side, but rather better focus is placed for........

© Business Recorder