ARTICLE: Last year on the completion of one year of PTI in government, I had written an article with the title "Great Expectations" based on the novel by Charles Dickens narrating the story of an orphan boy named Pip who has ambitions and embarks towards self-improvement. The author focuses on several major themes to include social disparity, ambition amidst uncertainty and deliverance facing challenges while portraying the boy to be at odds with the world around him. The author's theme well suits as a similarity of the struggle by PTI towards their objectives for Pakistan. The initial year, though with minor gains to count, was dedicated more towards overcoming the impediments in their way to ensure delivering what was envisioned by them while seeking votes to implement their very ambitious manifesto. Hence, my article with the title "Great Expectations" on PTI's first year in government.
The second year took off with improved economic indicators, confidence of the outside world to look at Pakistan as a potential destiny including for trade and investments and witnessing the arrivals of various heads of states and governments to Pakistan. The visit of the Prime Minister Imran Khan to the United Nations in September and his address to the General Assembly coupled with his interaction with the President of the United States was seen as advocating the much needed cause of Pakistan and the aspirations of its people. However, the rising trend did not last too long as COVID-19 pandemic, by late February, had reached the shores of Pakistan creating fear, more so witnessing the havoc it started playing globally and severely affecting even several advanced economies. As if this was not enough as a jolt, the country experienced several spells of heavy torrential rains, the first in many decades for its ferocity, which affected every part of the country leaving behind tales of misery and massive destruction. The case of the pandemic was superbly handled by the government considering the resource constraint and the public apathy towards it. This fact was recognized globally and even written about in media as to how it has puzzled health experts internationally considering crowded urban areas in Pakistan and the insufficient health services available.
As to the recovery after the havoc played by the rains, the government has considered remedial measures and the Prime Minister is in Karachi as I write, delivering what is termed as "Karachi Transformation Plan" taking all stake holders on board including the army to help restore normalcy on a war footing.
While the surprise roller coaster ride by the unforeseen events faced by the country, the government did not lose track of the priorities it had set for itself. Some of the facts and figures speak for itself substantiating the claims being made by the government.
International credit rating agencies evaluating Pakistan's fiscal and monetary policies such as Moody and Fitch in their analysis appreciated the tremendous strain being faced due to Covid-19 pandemic and the fallout effects it would have on the economy. Cutting down on the benchmark interest rate by 625 points to 7% was basically to help households and businesses to cope with the pandemic. They expect the country's economic indicators to further improve as Pakistan is committed to implement the economic reform agenda under IMF loan package. The current account deficit narrowed to 1.1% of GDP from a peak of 6.1% in FY18. In July it posted a surplus of $424 million against a deficit of $ 613 million last year.
Multilateral donors such as the World Bank and the Asian Development Bank were forthcoming in their assistance knowing that Pakistan is committed to the IMF program. Bilateral assistance also followed with China taking the lead and anticipating the foreign exchange reserves to gradually increase to an all-time high by the end of next fiscal year expecting the IMF loan program to remain intact. Currently it stands at nearly $20.00 Billion which is attributed to inflows received from both the multilateral and bilateral agencies, including $505.5 from the World Bank.
Additionally, inward remittances from overseas Pakistanis are playing a major role as $2.7 Billion received in July alone; an increase of over 30% compared to last year. Fitch Ratings has affirmed Pakistan's long-term credit rating at "B- ". This is a clear endorsement of the government's well-considered and effective economic and fiscal policies in challenging times the country has ever faced and much of which is attributed to a tight monetary policy and a flexible exchange rate regime in place. The recent improvement in Pakistan's balance of payments position will be adequate for the country to meet its external obligations over the next 12 months. The stock market with its upward trend, up by 30% since March and labeled as Asia's best, performed to cross the 1 billion mark in traded volume in a single day, the first in 11 years. A factor contributing to this is that outflows seems to have been finally plugged and Pakistan is now under the radar of foreign fund managers. The Government is also taking steps to meet the FATFs requirement for getting out of the grey list which has affected inflows of FDIs in Pakistan. The Government is conscientiously working on it and has complied with 14 of the 27 requirements of FATF action plan and the remaining are likely to be met by the time members of FATF meet next month in Paris. This would not only position Pakistan as a responsible state among the comity of nations but would prevent money laundering which is a major source of corruption in the country. The Government is very hopeful in succeeding in its endeavor and has prepared 8 bills to pass through the parliament to move Pakistan into FATF white list. If it succeeds, inflows of investment are likely to improve substantially.
The pledges given for a "NAYA PAKISTAN" warrants the attention now to be focused on what the man on the street expects. Respectable employment, meeting the kitchen budget, provision of basic needs such as water, education, health, housing, sanitation and the list of expectation is long with wanting to immediately arrest the inflationary trend topping it. In order to be able to respond, the wheels of the industry need to be running and running fast. Though the government is moving in that direction, the pace is slow and very little to show. The common denominator request by business houses is for ease of doing business, cost of doing business, rationalization of taxes and above all removing the impediments in their way with respect to corruption and mis-governance which more than often diminishes the hopes that were running high when the PTI manifesto was first announced for businesses with respect to trade and investments into Pakistan. Very little FDI has been attracted in potential sectors such as Oil & Gas, Energy, Information Technology, Engineering and Minerals besides insignificant Joint Ventures to boost value added exports from Pakistan in sectors such as Textiles, Seafood, Pharmaceutical, Surgical Instruments, Sporting Goods, Auto Parts and here too the list of export potential sectors is extensive. Pakistan has the raw material and the requisite trained manpower to exploit the resources which are abundantly available. The Rupee depreciation of over 30 percent should have had a significant positive impact on exports but the dismal figure of even $25 Billion is yet to be crossed and that too with only one, the textile sector contributing over 50%.
The PTI government had made significant progress towards important fiscal and economic reforms prior to the global coronavirus outbreak and it is hoped that the momentum will be restored towards looking into ways and means to ease the burden on the common man. The benefits of the success achieved in stabilizing the economy and negotiating with international agencies has yet to filter down to the common man whose immediate need is for the government to arrest the runaway inflation and be able to at least meet his daily necessities.
Kalim Farooqui, Managing Director Technology Links
The writer is an active member of several Bi-Lateral Business Forums in Pakistan and the Managing Director of Technology Links.