KARACHI: The State Bank of Pakistan has found a number of weaknesses in economic policies, including energy strategy, and has asked the government to address the weaknesses.

The central bank issued its annual report 2014-15 on Friday with a critical analysis on several segments of the economy.

“Despite a sharp reduction in interest rates and an incre­ase in public investments, private investments did not recover. Investors’ confidence demands the presence of a predictable macroeconomic environment with well-coordinated and consistent long-term industrial and trade policies,” the report said. Another factor daunting do­me­stic and foreign investors is the state of domestic energy supplies. Businesses have suffered over the past few years because of frequent power and gas outages.

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Although the situation improved slightly in a couple of years, several industries like leather, paper and glass, are still not able to produce at optimal capacities.

“At its core, this shortage of energy also reflects the lack of a coherent policy,” said the report.

The absence of an export-oriented growth strategy or a rational import-substitution focus, over the years has resulted in recurring stress on the external account, which did not allow the economy to move towards a high growth trajectory, said the report.

“To increase exports, the government should fix the fundamentals first: stricter regulations should be in place on quality, research and labour institutions must be strengthened, technology up-gradation should be pursued, and efforts must be made to ensure product diversification and tariff rationalisation.”

Published in Dawn, December 12th, 2015