Pakistan faces a serious problem of recurrent current account deficit. We have more dollars flowing out of the country due to imports than we earn from exports and through remittances. In 2021, the current account deficit totalled about $21 billion. In 2022, the situation has further deteriorated due to the mounting burden of foreign public debt worth about $90b which necessitated an expenditure of $20b in the shape of foreign public debt interest and principal servicing payments.

We are confronted with an impossible situation. As compared to the State Bank of Pakistan (SBP) reserves of a little over 9 billion dollars, Pakistan has to manage a $40b dollar financing requirement for 2022-23, including a recurring current account deficit and about $20b in foreign public debt interest and principal servicing.

How do we meet the challenge? Getting new loans to pay off the old ones is not good economic management. Unfortunately, instead of tapping indigenous resources we are all the time going to the International Monetary Fund (IMF) and other creditors to bail us out. But this is no long term solution to our problem. It is time we thought out of the box to find a way out of the blind alley we have stumbled into.

To this end our first priority should be to earn more foreign exchange through higher exports. This is a sector we have badly neglected. Even Bangladesh, which is a resource poor country compared to Pakistan, is nearing an export income of about fifty billion dollars, while we have just crossed thirty billion dollars. To boost exports the first requirement is to incentivize industrial production through subsidized energy and cheaper essential inputs. Developing agro-industries is another way to earn foreign exchange.

On the other hand, there is a dire need to reduce our expenditure on imports. As experts have pointed out, a large proportion of our imports are unnecessary or wasteful. Many of our export items can be categorized as luxury and need to be banned. These include high priced Mercedes and other international brand cars which we can do without. The same principle should apply to cosmetics and edibles like milk and biscuits. The formula should be to ban all imported goods for which there are local substitutes available.

Pakistan has considerable reserves of natural gas which should be used for industrial purposes such as fertiliser and textile production. Many of us do not know that the domestic gas consumption is greater than the imported regasified liquefied natural gas (RLNG) volume worth $3.4b in 2020-21. The diversion of gas away from domestic use to the industrial sector will eliminate RLNG imports.

To put our economy on an even keel, it is essential that we reduce our petroleum imports. This objective can be achieved by the Oil & Gas Development Company (OGDC) and Pakistan Petroleum Limited (PPL) undertaking aggressive onshore and offshore oil and gas exploration activities. The Arabian Sea has not been explored by the OGDC and PPL although India has found sizable offshore energy reserves near Gujarat.

Another way to control imports is to replace costly imported fuel-based private transport with public transport, like railways. This will greatly reduce the cost of doing business if the truck fleet used to transport containers from the GT Road to Karachi Port is replaced by the Pakistan Railways. All countries in the world are increasingly using railway networks to facilitate business activities. Pakistan is lucky to have a nationwide railway network since its independence, and it must plan to make more use of it.

A major portion of installed electricity capacity is based on imported fuel. This ratio needs to be changed by switching to hydroelectricity generation for which there is unlimited potential in the northern areas of Pakistan. The current account deficit is the main reason for a weak rupee. Unless we tackle this issue, we will remain saddled with a mounting burden of debt.