APROPOS the article ‘Are deficits always a bad thing?’ (July 9). Deficits are not always a bad thing for economic growth and development. Bangladesh, India and Sri Lanka have progressed with deficits.

These countries share many common traits with us. Then why Pakistan has always ended up with an IMF programme is a million dollar question. This requires deep analysis and an out-of-box solution.

Pakistan has been in a war-like situation for more than three decades owing to internal and external factors. Poor law and order, war on terror, hostile neighbours, high population growth, rampant corruption, poor governance and populist decision-making have severely affected economic growth and the country’s stability. Most of all, our giant eastern neighbour’s perennial hostility is a problem.

The regional countries have used deficits to finance investment in asset building projects. We have been mostly using deficits to clear our past debt liabilities. Pakistan at present is severely trapped in a vicious circle of debt. Hence, it is essential to get out of this trap by narrowing deficits (fiscal, trade, current account and primary deficits) and attracting private sector (local as well as foreign) investment.

Pakistan will also have to maintain narrow deficits, ban luxury items imports, ensure transparency and corruption-free public sector operations, progressive and business-friendly regulatory framework, targeted and performance-based subsidy to business and the industrial sector, elimination of parasitism in certain sectors and an effective and fair accountability framework.

There is need for national and political consensus that economic growth and stability is a pressing need for the nation and political change of any sort should not affect this commitment.

Ahmad H. Ghumman
Islamabad

Published in Dawn, July 20th, 2020