LAHORE - The newly-established Institute for Policy Reforms (IPR) on Thursday launched ‘review of macro economic performance in the first six months of 2013-14.’

A launching of both — the institute and the report — was held here at Aiwan-e-Iqbal which was chaired by Syed Babar Ali and attended by members of IPR board of directors and board of advisors besides senior journalists and others.

IPR board chairman and former federal finance minister Humayun Akhtar Khan welcomed the guests and gave detailed introduction of the institute and its aims. He said it was a broad-based policy institute aiming at shaping policies according to the needs of the country. He told that the institute would issue a report on eternal security, energy and water issues. He also gave detailed introduction of the members of board of directors and board of advisors of the institute. The organisation’s executive director is Ashraf Hayat while its board of directors’ members included Khalida Ghaus and Haroon Akhtar Khan, Dr Hafiz Pasha. IPR Board of advisors’ members are included; Dr Atta ur Rahman, Abdullah Hussain Haroon, Moeed Yusuf, Salman Akram Raja, Lt Gen (r) Sikander Afzal, Abdullah Yusuf, Shakil Durrani, Roshan Bharucha, Munawar Baseer Ahmad, Tariq Parvez, Tasneem Noorani, Dr Iqrar Ahmad Khan, Dr Manzoor Ahmad and Dr Abid Suleri.

The organisation’s mission is to fill a key void in the policy space. This is in response to the complete paralysis in effective policy formulation and implementation in Pakistan, which is visible everywhere; from poor law and order to energy shortage. The management of IPR vowed to keep the think tank independent and non partisan. They will not seek donation or government assistance to run its operations. In his presentation at the launch of the IPR, eminent economist and former finance minister Dr Hafiz Pasha’s instructive and informative review of Pakistan’s macro-economic performance for July December 2013 captured the underlying dilemma of the Pakistan economy. The eminent economist’s analysis posed the question whether growth was sustainable with low foreign exchange reserves, high inflation and low public investment.

He said that even if all possible external inflows in to the Pakistan economy materialised by end-June 2014 Pakistan’s foreign exchange reserves would still be low, at about two months’ import cover. At present, foreign exchange reserves are less than one month of imports, he said and added that the next tranche from IMF of $550 million requires waivers from its Executive Board. He said the increase in the rate of inflation is another issue that causes concern. Inflation affects growth and is an unfair tax on the poor who suffer the most, he said. “As it is, the government has increased the burden on the poor by further raising the rate of GST, a regressive tax. One of the principal drivers of inflation is the high level of printing of money by the SBP,” said Dr Pasha.

Dr Pasha’s analysis of the economy was backed by numbers and facts. He recalled that the new government had taken a number of initiatives in the areas of security, energy and the economy soon after assumption of power.

The fiscal year began with an encouraging growth rate of five percent in the first quarter as reported by the PBS. Large-scale industrial production has shown some revival. But slow growth of exports and a massive cut in development spending are constraining growth. As such, growth is unlikely to exceed 4% in 2013-14.

“To meet IMF benchmarks, the government has successfully controlled the fiscal deficit at 2.2pc of the GDP in the first six months due to a big reduction in releases for the PSDP, containment of growth in current expenditure, larger non-tax revenues than anticipated and generation of large cash surpluses by the provincial governments. The problem is the nature of financing of the deficit with too much reliance on printing of money,” he said.

Dr Pasha said that the economy was poised on the ‘knife edge’. Only if foreign exchange reserves rise sufficiently can the path of economic revival be pursued in coming months.

Later on in his concluding remarks, Syed Babar Ali said that there was s much waste in many government’s departments. He said billions of rupees could be saved by cutting down unnecessary expenditures.