‘Pakistan’s economy is taking off and the future outlook till 2020 has been termed ‘Very Good’. The rationale used in building this argument is that our working age population is growing and that’s a very good sign for the economy. Inflation is under control which is increasing in the vicinity of 3 per cent but on the other hand GDP is growing at 4.5 per cent. Contrary to the populist demagogy, our debt level is pretty low in relation to comparative economies whereby debt to GDP is at 65 per cent. We have a decent manufacturing base with export economy and we are also investing in factories by opening industrial parks as elucidated in the China-Pakistan Economic Corridor (CPEC).’

This is an excerpt from an article about Ruchir Sharma’s recent book ‘Rise and Fall of the Nations’ which published during 2006. Ruchir Sharma is an Indian American who works for Morgan Stanley. In this book, he evaluated world economies and categorised them as “Good”, “Average” and “Ugly”. He rates the United States as ‘Good’, Europe as ‘Average’, Canada and Australia’s outlook is ‘Average’ and New Zealand doesn’t even come under discussion.

According to aforementioned writer, China’s economy has been placed in “Ugly” section. But when he comes closer to Pakistan’s economy, it looks like ‘Very Good’. It was not only Ruchir Sharma, almost each and every financial expert was optimistic about Pakistan. They were saying, forget India, Pakistan is emerging Market and economic hub.

But now all previous financial analysis and predictions look like dreams which have gone sour. I am a great patriot and optimistic writer, who strongly believes in positive reporting, contrary to some of my fellow journalists who have faith in negativity. So, I have decided to portray and present brighter image of our beloved country but the only snag is Pakistan’s credit and debit rating which is altogether negative.

Fitch, one of the three major rating agencies of the world, was latest to downgrade Pakistan’s debt rating from ‘B-Positive’ to ‘B-Negative’. Inflation, high debt repayment obligations, low foreign exchange reserves and fragile fiscal situation were reasons cited by the agency for the fall in rating.

Another global credit rating agency, Moody’s who has ‘B3’ credit rating for Pakistan with stable ‘Outlook’ during 2017, now maintains ‘B3 negative’ credit rating for Pakistan and has hinted at the possibility of further downgrading Pakistan’s external credit rating.

Standard and Poor’s while being the third rating agency, is equally pessimistic about our financial crisis. The S&P who raised Pakistan’s sovereign credit rating to ‘B-Positive’ during last year, has reversed the decision and says economic indicators are not positive.

Although, second instalment of $3 billion Saudi bailout package has come to rescue dwindling foreign exchange reserves, still the vehicle of our economy is on reserve gear. Few days ago, SBP declared its reserves at $7.2 billion and the new figure may be around $8.2bn.The first tranche of Saudi aid landed on Nov 9, while last instalment is expected in January 2019.

Increasing trade gap and current account deficit are haunting claims of economic reforms while foreign exchange reserves are also on steep fall. Our currency is on free fall and abrupt devaluation of the rupee against dollar has its own implications. Initially, our government claimed that they knew nothing about rupee depreciation. But when this claim was rejected by SBP, they changed the side and were off the view that falling rupee is blessing.

The motive behind rupee devaluation is to bring down the trade gap. They think, due to dollar rate, imports would shrink while exports would expand due to rupee devaluation. But this is a faulty assumption. Gains on exports would be too little and losses on import of raw material and other necessary items would be too large in magnitude.

Loss making public sector enterprises are another headache. PTI promised to make these public sector institutions profitable but they are as usual a parasite. Pakistan postal service who comes under the ‘star minister’, Murad Saeed, has been facing Rs 12.5 billion annual deficit while the ‘star minister’ looks busy in a more important national obligation , to grant or not NRO.

Our government is struggling hard to get bailout package from IMF while public sector enterprises are in a hurry to get maximum loans from local banks. Latest data by SBP reveals that PSEs are on turbo mode and borrowing heavily from banks. Last year, the PSEs borrowed Rs2.5bn from banking sector during first half of the fiscal year while now they seem to set a new record as borrowing in first five months of this fiscal year has reached Rs115.4bn.

Railway minister claims improvement by reducing losses but the SBP figures about PSEs are not compatible to these assertions. The huge flow of taxpayers’ money is being gobbled up by PIA, Pakistan steel and Railway. When I listen to appeasing and pleasing claims of Sheikh Rasheed, an idiom comes to my mind ‘If wishes were the horses, beggars would be riders’. But here comes another contradiction, a great leader has told us that beggars can’t be choosers.

There was a time, when without any counterfeit effort, all rating agencies and financial experts were optimistic about our economy and positive image was being portrayed. But now, we are striving for positivity and all indicators are negative. What went wrong ? This billion dollar question needs our careful consideration.


The writer is Lahore based Journalist.