The latest data released by the State Bank of Pakistan (SBP) on the balance of payments showcases the significant progress achieved under the Pakistan Tehreek-e-Insaf (PTI) government with exports of goods and services and remittances posting record increase.
Pakistan earned an additional $ 18 billion income in the last one year of the PTI government as compared to Pakistan Muslim League-Nawaz’s (PML-N’s) government. This has helped us manage the external deficit despite sky-rocketing international commodity prices. Not only did the PTI government outperform previous regimes on all performance metrics, it achieved this success despite the biggest global economic crisis of our lifetimes.
The revival of the export industry was one of the cornerstones of the PTI manifesto. Under the PML-N government, the growth in exports was 0% in 5 years. Thousands of textile factories were shut down and millions of workers became unemployed during the 2013 to 2018 period. The PTI government launched a comprehensive revival plan for the export sector.
The industry was provided subsidized power and gas tariffs to make them regionally competitive and their credit facilities were enhanced through the SBP refinancing schemes. Record tax refunds of over Rs 700bn were issued and a single-window customs trade facilitation system was launched to reduce costs and time delays for exporters. Tariffs were rationalized and customs duties on over 3,000 HS code items were reduced while additional duties removed.
As a result of these measures, we see a strong revival of the export industry. Exports of goods crossed $ 3 billion in March 2022, the highest exports for any given month in Pakistan’s history. Exports are growing at 27% and in the past 12 months, have totaled $ 30 billion, the highest levels ever recorded. This is a massive increase of over $ 5 billion compared to $ 24.8 billion exports left by the PML-N government in 2018.
Textile exports posted a 30% increase and in the past 12 months have crossed $ 17.5 billion, again a new record. This is an increase of $ 4.1 billion compared to the PML-N government where textile exports totaled $ 13.4 billion in 2018. Similarly, exports of value-added services led by the IT sector have posted an increase of 29% to $ 2 billion in the first nine months of FY2022, which is a 100% increase compared to $ 1 billion exports under the PMLN in 2018.
Similarly, remittances are on target to reach $ 32 billion in the current year compared to $ 19 billion under the PML-N government. This is a massive $ 13 billion increase in the PTI government’s tenure. This has been achieved due to the confidence of the overseas Pakistanis on the credible leadership of Imran Khan and incentives given through a new wide-range of banking products and a Bill to allow them the right to vote.
Pakistan will earn an additional $ 18 billion income from exports and remittances in the current fiscal year 2022 compared to previous PML-N regime. The economy that PTI inherited in 2018 was facing a balance of payment crisis. The PML-N government ran record $ 20 billion deficits despite low commodity prices with oil averaging around $60 bbl.
Today despite oil at above $ 100bbl, the CAD (current account deficit) is contained at $ 13 billion in the first nine months and likely to close the year at $16bn to $ 17 billion. This has been achieved as a result of record exports and remittances. In real terms, the full year CAD is likely to remain around4.5% of GDP, compared to the 7% of GDP deficit that we inherited from the PML-N in 2018.
As a result of record high deficits run by the PML-N government, external debts sky-rocketed. The PML-N government added a whopping $ 11.8bn of new foreign debt in their last year in government. In three and a half years under the PTI government, despite unprecedented external challenges including record high commodity prices and the COVID crisis the increase in external debt in any given year remains below the $ 11.8bn added by PML-N.
The success of the PTI government in reviving exports has boosted growth and created the highest increase in new jobs of any government on record. The economy posted growth of 5.6% in 2021 and is on track to post growth of 5% in the current year. Private sector credit of Rs 1.2 trillion in the first 9 months of current year, is the highest ever recorded and a growth of 170% from last year.
Manufacturing sector (LSM) has posted growth of 7.8% in the current year. Profitability of the top 100 companies listed on Pakistan Stock Exchange (PSX) posted the growth of 62% in 2021, the highest growth in the last 10 years.
The inclusive growth strategy adopted by the PTI government with focus on labour intensive construction, export industry, SMEs, tourism, and agriculture has led to the creation of 5.5 million jobs in first three years, the highest by any government on record. On average 1.84 million jobs were created under the PTI government per year, which is significantly higher than the Pakistan People’s Party (PPP) government (1.4 million) and the PML-N government (1.1 million). Current trajectory suggests that we would have achieved the 10 million jobs promised by Imran Khan in the 2018 manifesto.
The PTI government had also taken pre-emptive measures to handle the global crisis caused by the sky rocketing international commodity prices. Difficult steps were taken to reduce imports including raising interest rates, ensuring adequate financing to manage SBP reserves and exchange rate correction. The International Monetary Fund (IMF) programme was put back on track and $ 22 billon of liquid reserves were shored up by end of Feb 2022.
That’s when the Pakistan Democratic Movement (PDM) coalition jumped in to sabotage the economy and cause unnecessary panic in the markets. Even today, SBP reserves of $13.2bn, including Chinese deposit which they have promised to roll over, are higher than the economy we inherited from the PML-N with SBP reserves of $9.8bn.
(The writer is a former federal finance minister. The views expressed in this article are not necessarily those of the newspaper)
Copyright Business Recorder, 2022