THE remarks made by Finance Minister Muhammad Aurangzeb while chairing the meeting of the Economic Coordination Committee of the Cabinet (ECC) on Friday would surely boost morale of the people of Pakistan as these show the hard work of the economic team has started bearing fruits and good days are ahead for them. The Minister updated the platform about macroeconomic stability across multiple sectors and highlighted the strengthening of the rupee and the foreign exchange reserves, positive growth in the IT sector, greater inflows in Roshan Digital Accounts and current account surplus.
No doubt, people of Pakistan have paid and are still paying a price for tough policies of the Government but positive economic indicators would compensate their agony if the trend continues and the gains are not only stabilized but maximized in times to come as this is the only way forward for the country. Exchange rate stability has translated into meaningful reduction in the rate of inflation and the trend is expected to continue in the foreseeable future because of impending release of tranches by the International Monetary Fund (IMF) under the new deal as well as substantial cut in the prices of oil products. There are reports that traders have started off-loading their dollars in anticipation of appreciation of the local currency and stocks have reached all-time high crossing the mark of 82 thousand. Remittances by Overseas Pakistanis are also increasing at an appreciable pace whereas information technology exports have stabilized at $300 million per month because of a combination of measures. However, the realization of the goal of true potential of IT exports is still a far off cry because of the lack of a salutary environment. In another positive development, the Minister stressed that Pakistan’s rejection of all bids for treasury bills on Wednesday was a strategic move to show that the government is not under pressure to borrow. He noted that, while the Finance Ministry had borrowed $600 million from Standard Chartered Bank at a historic interest rate of 11%, the government’s overall borrowing strategy remains prudent. With the Government determined to borrow on its own terms and a cut in interest rate by the central bank would hopefully encourage banks to focus on lending to the private sector. We may also point out that while the economic team of the Government is focused on putting the economy back on track, the administrative machinery is not helpful in ensuring trickle-down effect of the positive indicators and this aspect needs attention by the Prime Minister and the Chief Ministers of the four provinces.
