The World Bank in its South Asia Economic Focus Report for 2017 has projected 5.25 % GDP growth rate in Pakistan. In early February Fitch Ratings, a global agency which monitors the performance of economies around the world with a view to assess their growth potential and the future prospects, gave ‘B’ rating to Pakistan which denotes prosperity. The report predicted a GDP growth rate of 5.3 % during the current financial year registering more than 2% raise since 2013. The report issued by the agency on the basis of the review concluded that Pakistan would not face external liquidity problem in the coming years. The agency attributes the strengthening of the economy to phenomenal raise in the foreign exchange reserves, reduction in the fiscal deficit, structural reform, soundness of the banking sector leading to fall in the non-performing loans, fiscal consolidation, boost in the revenues and reduction in general government budget.
This reality has also been acknowledged by a number of other rating agencies like Moody’s, MCI and global lending institutions including IMF, World Bank and ADB besides internationally renowned papers like The Economist and Wall Street Journal have also from time to time been acknowledging the turnaround in the Pakistan economy, triggered by sound management of the economy by the PML-N government. In its latest assessment of Pakistan’s economy, Wall Street Journal said that poverty and terrorism in Pakistan were on the decline, foreign investments have increased, as have consumer spending leading to a burgeoning middle class.
The fact is that the Chinese investment in CPEC and the booming economy have given confidence to the foreign investors. Reportedly a Dutch dairy company, Royal Friesland Campina recently paid $461 million to buy control of Engro Foods in Pakistan. The CEO of the same company who visited Pakistan in the recent past, in his meeting with the Prime Minister revealed that the company would bring additional investment of $ 100 million to Pakistan in the next two years. Last year China’s Shanghai Electric Power agreed to pay $ 1.8 billion for KESC shares. Turkish Electric appliances company Arcelik paid $258 million for Pakistan appliance maker Dawlance acknowledging that Pakistan had an increasingly prosperous working and middle class. Our pro-active finance minister Ishaq Dar deserves unqualified compliments for winching the economy out of the economic mess and putting it on the path of sustained economic growth.
Management of an economy, particularly a developing country like Pakistan is undoubtedly an arduous task due to international linkages, developments on the global level as well as internal economic, social and political situation. Needless to emphasise that when the PML-N government was installed in 2013, the economy was in shambles with the GDP growth rate hovering around 3%. Fiscal deficit stood at 8.8% and inflation was in double digits, foreign exchange reserves were at $ 6.008 billion. The country faced a debilitating energy crisis.
Three and half years later the growth rate achieved during the last financial year was 4.7 %, the highest in the last eight years, which during the current year as per predictions of the international agencies is going to touch 5.3%. The fiscal deficit has been reduced to 4.2 % and further squeeze is expected during the current year. Inflation has been maintained at a single digit. Foreign exchange reserves stand at $24.258 billion which represent almost four times increase since the present government took over. What is remarkable is that the revival of the economy has been orchestrated in spite of heavy drain on resources due to the operation Zarb-e-Azb, rehabilitation of the displaced persons of North Waziristan and rebuilding of the destroyed infrastructure as well as heavy repayments of the loans obtained by the previous governments.
The energy crisis that was attributable to the negligence and criminal indifference of the previous governments to the growing energy needs of the country and was hampering progress in the industrial and agricultural sectors in addition to causing difficulties for millions of households across the country, has been checked in its tracks. The power outages have been considerably reduced owing to the addition of 3000 MW of electricity to the national grid. Under CPEC power projects with a cumulative production capacity of 10,640 MW have been set rolling and all of them are expected to come on stream by the end of 2018 which means that the energy crisis will not only have been overcome by then but the country would also have enough electricity for the new industrial projects. The government also envisages addition of another 30000 MW by the year 2030. The government has also concluded an agreement with Qatar for import of LNG and a similar agreement with Azerbaijan for import of LNG is in the offing. Russia reportedly is also interested in exporting LNG to Pakistan. The initiative to diversify the sources of import of LNG is a visionary move to avoid any disruption or crisis due to dependence on a single source.
The PML-N government very rightly has also been giving top priority to the development of infrastructure. The fact is that all modern growth models invariably rely on development of infrastructure, which is considered as an indispensable ingredient of industrialisation and economic growth. The phenomenal economic prosperity and industrial development in Asian countries such as China, South Korea, Singapore and Malaysia during the last three decades is a ranting testimony of this modern reality. The establishment of Asian Infrastructure Investment Bank by China with the objective of development of infrastructure in the Asian countries to spur economic growth is a pointer to that fundamental reality.
Unfortunately Pakistan has failed to achieve rapid industrialisation due to wrong approaches and policies of the successive governments, divorced from the emerging economic compulsions and variables. However it is heartening to note that the PML-N government has adopted a pragmatic and visionary approach to economic development through building of necessary infrastructure. Peshawar-Karachi motorway which is expected to be completed by 2019 and a network of roads being built across the country will surely act as catalyst to nudging economic growth and bringing about national integration. Prime Minister Nawaz Sharif was right on money, when inaugurating the first phase of Karachi-Hyderabad motorway in February he said that people were witnessing the emergence of new Pakistan with improved infrastructure and communication network and the motor ways were life line of the economy. The CPEC is also about building infrastructure, which holds the promise of enabling Pakistan not only to make up for the lost opportunities but also to become an economic power house within the next two decades.