FeaturedNationalVOLUME 18 ISSUE # 19

Time to stand on our own feet

Pakistan has been facing a number of economic problems for decades, which not only impede its progress but also hinder the provision of basic facilities to its people. It is time to fix the economy on a permanent basis, so that the country could stand on its own feet instead of running its affairs on loans and grants.

Pakistan’s biggest problem is that it spends more than what it earns through exports, remittances and tax collection. The country imports more than it exports, leading to a significant drain on foreign exchange reserves. This has led to a decline in the value of the Pakistani rupee, which has made it more expensive to import goods and services. The trade deficit has also made it difficult for the country to pay off its debts and has contributed to a decline in the country’s credit rating.

The PDM government has taken measures to curtail trade and current account deficits, but it has slowed down the economy and millions of people have already lost their jobs. Pakistan’s trade deficit narrowed by 33.18pc to $21.3 billion during the first eight months (July-February) of the current fiscal year as compared to $31.879 billion during the same period of last year. According to the Pakistan Bureau of Statistics (PBS), the country’s exports during July-February (2022-23) were worth $18.793 billion against the exports of $20.573 billion in July-February of 2021-22, showing a decline of 8.65pc. The imports decreased by 23.56pc during the period under review by going down from $52.452 billion last year to $40.039 billion during the current year. On a year-on-year basis, exports declined by 18.67pc to $2.305 billion in February 2023 against the exports of $2.834 billion in February 2022. The imports also decreased to $4.009 billion in February 2023 from $5.853 billion in February 2022, showing negative growth of 31.51pc. The trade deficit narrowed by 43.56pc on a YoY basis to $1.704 billion in February 2023 compared to $3.019 billion in February 2022. The trade deficit narrowed by 35.23pc on a month-on-month basis and stood at $1.704 billion in February 2023 compared to $2.631 billion in January 2022.

Pakistan’s current account deficit (CAD) also reduced massively to $74 million in February 2023 against $230 million in January owing to import restrictions and rise in remittances. In a tweet, the State Bank of Pakistan (SBP) said, “The current account deficit was $0.1 billion in Feb 2023 against a deficit of $0.5 billion in Feb 2022. Cumulatively, CAD reduced to $3.9 billion in July-Feb FY23 compared to a deficit of $12.1 billion in July-Feb FY22.” However, curbs on imports have negatively impacted the economy and job market.

Another major economic problem of Pakistan is inflation. It hit a new peak of 45.64pc on a yearly basis in the week which ended on March 16. According to the Pakistan Bureau of Statistics (PBS), the prices of 28 essential items went up, 11 decreased and 12 remained unchanged during the week. On a weekly basis, a major price hike was witnessed in food items as the rates of tomatoes went up by 18.06pc, branded tea by 9.26pc, potatoes by 4.52pc, bananas by 4pc, sugar by 2.70pc, wheat flour by 2.40pc, five litres of cooking oil by 1.20pc, 2.5 kilogrammes of vegetable ghee by 1.16pc. According to the statistics, the inflation rate for the group with an income up to Rs17,732 per month on an annual basis was 41.32pc. For the Rs17,733-22,888 per month income group, the annual inflation rate stood at 44.23pc. For the group having an income of Rs22,889-Rs29,517 per month, the yearly inflation was 44.51pc. For those having an income of Rs29,518-Rs44,175 per month, the annual inflation rate was 45.04pc. The yearly rate of inflation has reached 47.97pc for the group having a monthly income of more than Rs44,176.

The inflation rate in Pakistan has been consistently high for many years. This means that the prices of goods and services are increasing at a faster rate than the income of the people. The high inflation rate has made it difficult for people to afford basic necessities such as food, clothing, and shelter. It has also led to a decline in the standard of living for many people.

Another major problem of Pakistan is unemployment. The unemployment rate in Pakistan is very high, particularly among the youth. This means that a large number of young people are unable to find jobs and earn a decent living. This has led to social unrest and has also contributed to the brain drain in the country, as many talented young people are forced to seek better opportunities abroad.

The lack of foreign investment is another economic problem faced by Pakistan. The country has not been able to attract sufficient foreign investment, particularly in key sectors such as energy, infrastructure, and manufacturing. This has resulted in a lack of capital, technology, and expertise, which has hindered the country’s economic growth. It has also led to a lack of job opportunities and has contributed to the brain drain in the country.

Another major economic problem of the country is the energy crisis. The country is facing a severe shortage of electricity and gas, which has had a negative impact on the economy. Industries have been forced to shut down or reduce their operations, leading to job losses and a decline in economic activity. It is time to find ways for low-cost sources of energy.

Pakistan is facing a number of issues that are hindering its growth and development. These include high inflation, unemployment, a lack of foreign investment, an energy crisis, and a trade deficit. Addressing these problems will require significant reforms and investments in key sectors such as energy, infrastructure, and manufacturing. It will also require a focus on education and training to develop the skills of the workforce and attract foreign investment. Pakistan also seriously needs to improve its justice system and get rid of political instability for economic prosperity.