International financial institutions have started appreciating Pakistan’s “economic progress.” In its latest review, the International Monetary Fund (IMF) said Pakistan is successfully completing the structural benchmarks and meeting all performance criteria, set for the implementation of its $6 billion Extended Fund Facility programme.
The positive outlook is welcome but the question is: Whether it is based on facts or the IMF or other international organizations are falsely praising Pakistan, as has happened in the past governments, to achieve objects of international forces? People are skeptical because the IMF routinely gives positive reviews to Pakistan during programme implementation, especially when ties with the United States are on the mend. The IMF again acknowledged that Pakistan had made “considerable progress in advancing reforms and continuing with sound economic policies”. It added that economic activity in the country had “stabilised and remains on the path of gradual recovery”. It also noted that the current account deficit had declined due to the “real exchange rate that is now broadly in line with fundamentals”. It also said that Pakistan’s international reserves were increasing “at a pace considerably faster than anticipated”.
The first half of the fiscal year “had been strong” and that inflation was expected to decline as the shocks caused by sudden depreciation had subsided. It also stated that spending on social and development projects had increased. The IMF executive board has approved a $6 billion bailout package for Pakistan and immediately released $1b to ease a sustained pressure on the country’s foreign exchange reserves. In its latest review, the IMF said Pakistan had made considerable progress in the last few months “in advancing reforms and continuing sound economic policies.” The IMF mission chief said the economic activity had stabilized and remained on the path of gradual recovery, and the country’s current account deficit was declining.
International financial institutions also painted a rosy picture of Pakistan’s economy in previous governments, but the country found itself in dire straits in the end. The country faced a default-like situation after the end of every government. In the government of Prime Minister Nawaz Sharif, the media and international organizations and observers were all praise for Pakistan’s economic “miracle”. In fact, a number of reports and the PML-N government painted so much rosy pictures of Pakistan that Pakistanis thought their country would become an economic superpower in few years. According to the PricewaterhouseCoopers (PwC) report “The World in 2050,” Pakistan was projected to become the world’s 16th largest economy — in terms of GDP — by 2050, ahead of Italy and Canada. Pakistan was expected to be among the world’s most powerful economies by 2030, said the report carried by the World Economic Forum on its website in 2017. The report, titled “The long view: how will the global economic order change by 2050?” ranked 32 countries by their projected global gross domestic product by Purchasing Power Parity (PPP) and Pakistan was placed at No 20 in the list. The Economist also highlighted Pakistan’s journey towards “optimism.” It highlighted a number of developments and achievements of the country under the PML-N government.
The PML-N government and its media managers also exploited the reports to fool the nation. They attempted to convince Pakistanis that the country would overcome all its problems and become a developed economy in few years. However, Pakistan’s economic outlook changed after the PML-N government completed its five-year term. It shows foreign institutions were working on a plan to advance an international agenda in Pakistan.
Pakistan faces the same situation again. The government of Prime Minister Imran Khan claims to have improved the financial indicators of the country. International financial institutions are also recognising Pakistan’s financial progress. Moody’s Investor Service has upgraded Pakistan’s economy outlook from negative to stable in December. The World Bank has also acknowledged Pakistan as one of the top 10 “most improved” countries in the Ease of Doing Business Index. Pakistan’s current account deficit has narrowed 75pc to $2.153 billion in the first six months of the current fiscal year of 2020 as imports of goods declined sharply. According to the State Bank of Pakistan, the deficit was around $8.614 billion in the corresponding period of the last fiscal year. The current account deficit stood at $367 million in December, compared with $364 million in the previous month. Higher foreign investment and increased remittances from Pakistani workers abroad also contributed to the improvement in the current account balance.
Trade data, released earlier, showed exports increased by 4.5pc to $12.391b in July-December FY20, while imports fell by 20.9pc to $22.2b in the six months of the current fiscal year. Foreign direct investment into Pakistan surged by 68.3pc to $1.340b in July-December FY20. Foreign investment in government securities such as market treasury bills and Pakistan Investment Bonds reached $452.2 million in six months of FY20, compared with $0.1 million a year ago. The State Bank of Pakistan (SBP), in its first quarterly report, expects the current account deficit to be 1.5 – 2.5pc of GDP in FY20, largely due to increasing benefits from import compression.
In September, Pakistan’s current account deficit dropped by 80pc to a 41-month low of $259 million, with a 111.5pc rise in foreign direct investment (FDI) and 194pc increase in private investment. With FDI of $1.34 billion during the first half of the current fiscal year, a 68.3pc increase was registered in January, compared to $796.8 million of the same period of the previous fiscal year. In February, the reserves of the State Bank of Pakistan (SBP) also hit a 21-month high at $11.586 billion. The economic positivity was also reflected by the Karachi Stock Exchange (KSE), which registered a 16-month high in February, crossing the 42,000 point mark after a cumulative increase of 13,000 points in four months.
Undoubtedly, the key indicators are improving. However, the clear picture emerges in Pakistan when a caretaker setup takes charges after a government completes its five-year term. People hope the “economic boom” does not burst after the end of the Pakistan Tehreek-i-Insaf government.