Pakistan intends to increase GDP growth to 6-7pc with a focus on sustainability and inclusivity in medium and long-terms. The country has the potential to grow at even a faster pace and could have achieved its economic and development goals long ago if successive governments had not adopted cosmetic measures to further their political agenda. They failed to reform the economy for their personal and political interests. They took short-term measures to please their voters and legislators instead of making adjustments to put the economy on the path to sustainable growth. The result is that Pakistan lags behind even all regional countries.

Undoubtedly, there are some positive signs on the economic front recently, but all international financial and rating agencies have forecast the world economy to slow down in the coming months and Pakistan cannot save itself from the fallout. The government has also taken all possible measures to contain imports, while exports have also started declining after performing well in the last fiscal year. In its recent history, Pakistan has faced booms and busts every three to four years and failed to achieve its true potential. Its current account deficit starts widening whenever its economic growth accelerates. Experts say Pakistan needs to grow at 7-9pc for 30 years to reduce public debt and create jobs by bringing a radical shift in functioning of the state and redefining the government role as a facilitator. According to a reform agenda released by the Pakistan Institute of Development Economics, there should be a maximum of two terms for the prime minister and all the legislators to break the monopoly of political families that will lead to a stable democracy. The reform agenda emphasizes achieving a 7-9pc economic growth rate annually for next 30 years to create two million jobs per annum and reduce the public debt, which it said had already become “unsustainable”.

In its latest report titled “75 Years ‑ Economic Journey of Pakistan,” the Ministry of Finance highlighted major economic events since independence. According to the report, the country’s nominal GDP rose from $3 billion in 1950 to $383 billion in 2022, while per capita income rose from $86 in 1950 to $1,798 in 2022. Foreign direct investment (FDI) increased from $1.2 million in FY1950 to $1,867.8 million in FY2022. Remittances increased from $0.14 billion in FY1973 to $31.2 billion in FY2022. Export figures increased from $162 million in FY1950 to $31.8 billion in FY2022. Whereas, Pakistan’s imports increased from $276 million in FY1950 to $80.2 billion in FY2022.

Tax revenues rose from Rs0.31 billion in 1950 to Rs6,126.1 billion in 2022. Wheat production increased from 3.354 million tonnes in 1948 to 26.394 million tonnes. Rice production increased from 0.693 million tonnes in 1948 to 9.323 million tonnes in 2022. Maize production improved to 10.635m tonnes in 2022, as compared to only 0.359m tonnes in 1948. Furthermore, cotton production, which stood at 1.156m bales in 1948 has ramped up to 8.329m bales in 2022.

On the fiscal side, the size of the federal PSDP (Planning Development and Special Initiative) increased from Rs45.4 billion in 1990 to Rs900 billion in 2022. The share of direct taxes increased from 22pc in the 1960s to 39pc in the 2020s. Whereas, the share of indirect taxes reduced from 78pc in the 1960s to 61pc in the 2020s.

The statistics show Pakistan’s impressive performance in every field since independence but they also point out weaknesses and slackness as compared to other countries, which have left behind the country in every sector. Pakistan’s major problem is that it has failed to diversify its exports, which largely depend on its textile sector, which contributed around 61pc to the total exports of $31.8 billion during the last fiscal year. The All Pakistan Textile Mills Association (Aptma) believes export proceeds of the textile sector will go down by up to $3 billion in the current fiscal year because of the government’s policies that have “strangulated” the largest dollar-earning sector of the economy. Experts say the sector was also heavily incentivised in the past but if failed to reform itself and deliver. Despite all the money, special financing and tax rates it has received over the years, it continues to work with the same outdated machinery, little follow-through on value-addition, and simply unacceptable levels of vertical integration.

Pakistan’s export proceeds fell by 5.17pc to $2.21 billion in the first month of the current fiscal year from $2.34b in the corresponding month last year, according to the Pakistan Bureau of Statistics. On a month-on-month basis, the export proceeds declined by 23.95pc indicating a downward trend in the export sector. Last time the exports posted a negative growth of 14.75pc in August 2020. In FY22, Pakistan’s exports had exceeded a record $30b.

In their recent reports, all international financial and rating agencies have painted a bleak picture of Pakistan’s economy. S&P Global Ratings revised the outlook on Pakistan’s long-term ratings to negative from stable. “The negative outlook reflects growing risks to Pakistan’s external liquidity position over the next 12 months amid an increasingly difficult economic landscape,” it said in a statement. Citing the reasons, it said it had revised the outlook to negative to reflect Pakistan’s weakening external metrics against a backdrop of higher commodity prices, tighter global financial conditions, and a weakening rupee. “The Pakistan government has considerable external indebtedness and liquidity needs, and an elevated general government fiscal deficit and debt stock,” it added.

Earlier, Fitch Ratings had downgraded Pakistan’s outlook from stable to negative in view of the significant deterioration in the country’s external liquidity position and financing conditions since early 2022. Fitch saw considerable risks to the implementation of the IMF programme and to continued access of Pakistan to financing after the programme’s expiry in June 2023 in a tough economic and political climate.

According to Moody’s Investors Services, the economic and political uncertainty will challenge the pace of Pakistan’s fiscal consolidation in the fiscal year 2023. The credit rating agency said the credit profile of Pakistan reflects its low fiscal strength, weak institutions and governance strength, heightened external vulnerability risks, and elevated political risks, balanced against a large economy and robust growth potential. “The social risk in the country is also highly negative, reflecting low household incomes, limited access to quality healthcare and basic services, and ongoing safety concerns in the country that limit investment opportunities. Pakistan’s external vulnerability risk has risen and has been amplified by rising inflation, which adds stress to the current account, the currency, and foreign-exchange reserves, especially during heightened political and social risk,” it added.

The International Monetary Fund has also cut global growth forecasts, warning that downside risks from high inflation and the Ukraine war were materializing and could push the world economy to the brink of recession if left unchecked. Global real GDP growth will slow to 3.2pc in 2022 from a forecast of 3.6pc issued in April, the IMF said in an update of its World Economic Outlook.

Almost all governments in Pakistan have approached the IMF for bailout packages in the recent past. The IMF, World Bank, Asian Development Bank, and Moody’s, Fitch and S&P have pointed out weaknesses and structural flaws in Pakistan’s economy in their reports, year after year and decade after decade, but successive governments have failed to remove them. The last PTI government and the present coalition regime took some “harsh” decisions to improve the economy, however, they still fell short of targets. It is hoped the next government will be in a better position to take more steps to put the economy on the path to sustainable growth.