Prime Minister Imran Khan has approved the formation of his Economic Advisory Council, which will advise the government on key economic challenges facing the country.

The council is made up of academics, economists and development experts from top local and international universities and economic policy think tanks and comprises of 11 members from the private sector.

These members include Dr Farrukh Iqbal, the dean and director of the Institute of Business Administration, Dr Ashfaque Hassan Khan, principal and dean of the School of Socials Sciences and Humanities at the National University of Sciences and Technology, Dr Ijaz Nabi, professor of economics at Lahore University of Management Sciences and Dr Asad Zaman, vice-chancellor of the Pakistan Institute of Development Economics.

Sustainable Development Policy Institute Executive Director Dr Abid Qayum Suleri, professor of economics at the Lahore School of Economics Dr Naved Hamid, former State Bank of Pakistan governor Syed Salim Raza, economist Sakib Sherani, professor of economics at Princeton University (department of economics and Woodrow Wilson School of Public Policy) Dr Atif R Mian, Dr Asim Ijaz Khwaja, Sumitomo – FASID Professor of International Finance and Development at the Harvard Kennedy School and Dr Imran Rasul, professor of economics at University College London are also on the list.

In addition to the members from the private sector, the minister for finance, revenue and economic affairs; minister for planning, development and reforms; and the governor of the State Bank of Pakistan will also be part of the council.

The economic challenges

The newly formed PTI government faces some daunting challenges on the economic front. The biggest of all is the balance of payment situation where the government has fewer dollars to pay for essential imports, such as oil, which keep the economy going and repay foreign loans that, too, in dollars. The current dollar reserves stand at $10.2 billion, which barely provide two month’s cover for imports. To shore up its dollar reserves, Islamabad is considering multiple options, including another bailout package from the International Monetary Fund.

Foreign debt has surpassed $90 billion and the trade deficit stands at $18 billion as imports far exceed our exports, leading to a drain of dollars in import payments.

On the local front, the situation is not any better. The budget deficit stands at Rs2.3 trillion or 6.6% of the GDP. This means the government spends more and earns less, thus relying on borrowing to meet its financing needs. With national debt as high as 73% of the GDP, the government takes more loans to service the previous debt and left with little money to spend on development.