The country's current account, the difference between total exports and imports of goods, services and transfers, has switched to a surplus of $542 million from a deficit of $3.9 billion in fiscal year 2009-2010 according to data released by the State Bank of Pakistan (SBP) on Monday, July 17, 2011. It is learnt that the surplus has been achieved after a long wait of about seven years.
It has also been learnt that the surplus is because of the record export and remittances which has boosted the economy of the country. The policymakers and economic managers in Islamabad breathed a sigh of relief with their balance of payment woes fading. Analysts attribute the surplus to the trilateral positive the country witnessed in its external accounts augmented by record dollar inflows on account of exports, remittances and military aid from the United States under the Coalition Support Fund (CSF)
The pace of exports of goods and services left imports behind, as they grew 29 percent to $25.5 billion during the year from the $19.7 billion a year before. The import bill was 14 percent or $35.6 billion. Similarly, remittances crossed $11 billion mark for the first time in the history of Pakistan and stand at $11.2 billion showing an impressive growth of 26 percent on a yearly basis. It may be noted that the foreign exchange reserves have already crossed the $18 billion mark, which again is the first time in the history of the country.
Although, economists are saying that the increase is temporary and will die down due to the sharp decrease prices of cotton at the international market and uncertainty about the remittances, however it has proved one thing that the government's economic polices are framed on a solid basis and could lead to greater prosperity, if the government is allowed to work freely. Improvements can be made in the existing policies but the main thing is continuity of polices, which have been proved. With the completion of three years in power government has for the first time produced positive results on the economic front. To recall a scenario two years ago, there was a shortage of even the basic food items in the country, compare it with today's development, and it can be very easily inferred that the government has achieved something. The policy at the national level by increasing the support prices of cash crops led to increased growth and hence increased exports. Previously billions of dollars were spent on the import of basic food items in the country although it is a hard fact that Pakistan is an agricultural economy. The policy of keeping strategic reserves at the national level has increased food security in the country.
Statistics have shown that Pakistan is one of the biggest importers of mobile sets and accessories in the country estimated at around Rs 45 billion. The local market is ripe for the mobile industry. The Government however failed to check this trend. If the government declares it an industry and negotiates production of mobile sets and accessories in the country it can not only be a big sources of income but save more in terms of the import bill. The production trend if introduced could lead to employment generation and training of the youth. The ministry of Information Technology needs to take initiative in this regard.
The increase in remittances by Pakistanis living in foreign countries is yet another manifestation of the strength in the policies of the present government. The increase in the remittances is considered as an increase in confidence of the people in their government.
Reform policies, especially economic reforms, customarily involves a time interval between the formulation of polices and their on-ground implementation. The initiatives taken by the Government would not bring overnight results, but will set the process of change in motion with concrete results in a span of five to seven years. After food security the most important is energy security, which if achieved, would lead to tremendous growth in all sectors of the country's economy. The government, has framed a long-term energy policy to build large dams but should also think about construction of run-of-the-river projects, over the rivers flowing in the northern region of the country. It is believed that if tapped, the potential is enormous and could fulfill the country's growing energy demands.
Yet another sector which awaits reforms is governance, although part of the recommendations suggested by the National Commission for Government Reforms have been implemented including the betterment of work conditions and provision of market compatible salaries, still the Government has to take major initiatives. It is expected that the government would also pay heed to this issue.
The need of the time is to have political and law and order stability in the country as these both factors are largely responsible for economic growth. The government has completed three and half years, other political parties should adopt policies not to destabilize the government to provide a chance for the current polices to mature. The results are coming, as is shown in the economic indicators, but there is need of consistency which can only be possible if other political forces of the country show restraint and do issue-based politics instead doing opposition for the sake of opposition only.