Foreign exchange reserves, reportedly, have already touched $20 billion mark and are likely t to further increase to $ 21 billion by the end of this month as stated by the Finance minister Ishaq Dar while addressing a seminar on ‘ Role of Islamic Banking in The Development of Pakistan’ organized by Jang group at Lahore on December 12. He emphatically asserted that this unprecedented accumulation of foreign reserves was a result of the prudent and effective policies of the incumbent government. One can hardly take an issue with what he has said, as there are discernible and verifiable indicators available to substantiate the performance of the government in the economic arena.
When the PML (N) government was installed in May 2013, the economy of the country was in complete disarray. A burgeoning energy crisis gripped the country; growth rate was tottering around 3%; there was a double-digit inflation in the country; the budget deficit stood at alarmingly high 8.8% of GDP; foreign investments were in a nosedive; the stock market presented a gloomy outlook and the country faced an impending default on IMF loans. Management of an economy undoubtedly is the most onerous and convoluted task facing a government due to its dependence on a myriad of intricate variables within the economy as well as the extraneous factors that invariably affect the momentum of development. It is even more difficult for a country like Pakistan faced with a perennial scarcity of resources and debilitating political environment.
To begin with, the government accorded top priority to negotiating $6.4 billion Extended Fund Facility (EFF) with the IMF to avert the likely ignominious spectacle of default on IMF loans. It also initiated a process of macro-economic and structural reform, expansion in tax net, investment in infrastructure and energy projects and steps aimed at reducing budget deficit. These initiatives have nudged a process of economic turn-around, notwithstanding the drain on national resources due to operation Zarb-e-Azb, losses inflicted by the devastating floods and PTI sit-in in Islamabad and its politics of confrontation, which caused a loss of Rs.500 billion to the national exchequer.
It would perhaps be pertinent to enumerate the economic gains made by the government during the last two and half year.Budget deficit which was 8.8% of GDP and is considered to be the mother of all economic woes, has been brought down to 4.53%, growth rate has increased from 3.1% to 4.24%, development spending has touched Rs.427.67 billion, per capita income has increased to $1513 mark, stock exchange has touched new heights, foreign exchange reserves are at the record level of $20 billion. This revival of the economy has been lent credence by almost all the international lending institutions including IMF, World Bank and ADB, prominent rating agencies like Bloomberg, Mody’s, Standards and Poor’s and international media.
The government with a view to tiding over the energy crisis has also started new power producing projects under the CPEC which are likely to add 10,000 MW electricity to the system by the end of 2018, while plans are also on the anvil to produce another 14000 MW of electricity in the following years. However a lot more needs to be done. In view of diabolical challenges the country is faced with, there is an imperative need for evolving a national economic agenda. The Finance minister, therefore, was right on money to suggest a ‘ Charter of Economy’ agreed by all the stakeholders through a broaderconsultative process and collective wisdom.
Unfortunately inconsistency and lack of direction in the management of the economy by successive governments has been the major cause of our failure to achieve sustainable development. The stress invariably has been on the prestige projects rather than on plans related to strengthening economic edifice and promoting well being of the masses. There has to be a clear cut road map for economic progress, strictly adhered to by all the future governments and now is the most appropriate time to take the plunge.
— The writer is freelance columnist based in Islamabad.