ISLAMABAD: Think tanks can play a vital role in the formulation of an evidence-based monetary policy that may support governments in the provision of social and economic justice, said Mirco Günther, head of Friedrich Ebert Stiftung (Asia & Pacific).
Günther was speaking at a consultative meeting on ‘Evidence-based advocacy on policies for economic justice and development,’ organised by Sustainable Development Policy Institute (SDPI) and Friedrich Ebert Stiftung (FES).
He warned that Pakistan had been confronted with inflation for a long time which may lead to higher inequalities. He also stressed the need for aligning price stability to thrive socio-economic justice in the society.
Dr Sajid Amin from SDPI presenting the findings of the report “Monetary Policy for All” suggested that SBP should set 5% inflation target for next few years as lowering inflation targets without proportional wage increase shrinks purchasing power of common person and hinder economic justice. He further suggested maintaining less than 5 per cent inflation target for informal sector as it is more vulnerable to economic shocks. He recommended improving regulatory framework of commercial banks for increasing financial inclusion as 92% of their operations are centred around bigger investors which leads to higher informal borrowing.
Dr Abid Q Suleri, executive director, SDPI, warned of impacts of energy inflation. In this case, he said, economic inequalities will increase, and energy will either be inaccessible or unaffordable. He called upon the government to come up with evidence-based policy solutions to provide economic relief to public while at the same time satisfy the International Monetary Fund.
Dr Vaqar Ahmad, joint executive director, SDPI, said that unpacking various forms of inequalities is a common global challenge which will worsen amidst global stagflation, energy crisis and conflicts. He expressed that strong collaborations between organisations like SDPI and FES can play a pivotal role in finding evidence-based solutions to such challenges. He stressed the need for increasing public knowledge of monetary policy to enable them to demand better from political parties and influence inclusion of economic justice in party manifestos as 2023 is the election year.
Ali Kemal, chief of SDGs Support Unit, Ministry of Planning Development & Special Initiatives, said that interest rate is “the income of capitalists” and social inequalities are exacerbated by interest rate hikes as it contributes to inflation and stressed on aligning inflation targets for social justice in fiscal policy after consultation with central bank rather than solely based on political interests. He emphasised increasing financial services for Small and Medium Enterprises (SMEs) through commercial banks and tapping the potential of digital currency which is neglected in Pakistan.
Benjamin Reichenbach, policy officer for Pakistan, FES, said his foundation was organising conferences and other platforms to open space for dialogue to support sustainable development, which is a common objective between SDPI and FES.