Managing an economy is an arduous undertaking, more so in countries like Pakistan confronted with acute resource constraints, an astronomical national debt, a snow-balling energy crisis, dwindling foreign exchange reserves,  declining foreign investments, a low rate of GDP growth and a volatile law and order situation.

When the present government was voted into power, the economy was on the verge of collapse and the country was in the grip of a severe energy crisis.  Economic growth stood at 3%, national debt liability was around Rs.14,800 billion, inflation was in the double digits, interest rates were high, the budget deficit hovered around  8.8% of GDP, investments were low, foreign currency reserves were depleted and the country faced a default on IMF loans.

The PML (N) government arguably has shown unswerving commitment to revive the economy after completing nine months of its rule. Agreed, this is not a long enough period to fix every economic problem. The performance of the government therefore has to be judged by trends caused by its policy initiatives.

After assuming charge, the government paid off the circular debt of Rs.500 billion which was the cause of power outages. Not only that, the government devised an energy policy which envisages to take care of future energy needs. It has initiated work on an Energy Park at Gaddani where ten coal-based power projects are to be set up within the next five years. The ground-breaking ceremony for a nuclear power plant at Karachi has already happened, and it will start producing 2200 MW electricity by 2017. China has committed to provide US$ 6.5 billion for the project.

With regard to fixing the economy, the government has made considerable progress. It negotiated with the IMF for a fresh loan of US$ 5.3 billion which was necessary to save Pakistan from defaulting on international loans and to revive investor confidence. The IMF has already released two tranches of US$ 553 million each and expressed satisfaction over the government’s economic initiatives. The government is striving to broaden the tax base and achieve economic recovery through export-led growth and foreign investments. It has achieved GSP Plus status from the EU which should enhance our textile exports to the tune of US$ 1-2 billion. Austerity measures were also introduced in the budget and abolished discretionary funds at the disposal of ministers and the Prime Minister, accruing savings of Rs.40 billion. A program of targeted subsidies has been introduced to lower the burden on low income groups. Youth Loan Schemes and package of incentives for businessmen announced by the Prime Minister to revive domestic investment are also an important part of the revival program. Despite the financial constraints, the government increased the allocation for social security net from Rs.40 billion to Rs.75 billion.  

As a result of the foregoing measures, there is visible and verifiable evidence of improvement in the economy. According to the figures released by the Pakistan Bureau of Statistics, GDP recorded a growth rate of 5.00 % during the last quarter as compared to 2.9% during the corresponding period last year. Revenue collection has gone up by 16%, remittances have increased by 9% and exports have recorded an increase of 5%. Prospects of foreign investment are also very encouraging. China has indicated interest in investing US$ 22 billion in the mega power projects in the country. The UAE has also expressed willingness to invest in a coal-based power project at Gaddani.

Apart from the foregoing indicators, large-scale industrial sectors maintained a growth rate of 5.2% during the first six months as compared to 2.2% for the same period last year. Sales tax collections went up by 30%. Credit to private sector during the first six months increased to Rs.231 billion as compared to Rs.53 billion during the corresponding period last year. Machinery imports registered a 26% increase. Against an IMF target of 3.5% for the first six months, the budget deficit stood at 2.6%.  Exports have recorded an increase of 3.2 per cent in the first six months, remittances have increased by 9.5%. The rupee dollar exchange rate has also been stabilized and brought down from to Rs.105-106 from Rs.111. Although the exchange rate is not a policy instrument of the government and it has no role in its determination, it is undoubtedly its responsibility to ensure that the open market dealers and inter-bank players do not engage in manipulative games. The government did initiate measures to check this trend and deter speculators. The move has also addressed fears expressed by some quarters that devaluation of the rupee could enhance inflation and force the government to sell national assets at throw away prices. All these indicators and success stories prove beyond a doubt that the economy is well on its way to recovery and self-sustained growth.

 The writer is a freelance columnist.

Email:ashpak10@gmail.com