Pakistan seeks economic stability
Many fault lines including political and economic instability are big challenges to Pakistan. Fitch Solutions has rated the real GDP growth forecast for the FY 2022-23 down to 0.2%, from 0.6%.
Fiscal deficit is expected to remain at 7.1 percent of GDP in FY2022. Pakistan’s GDP is likely to be 292 billion USD by the end of 2022, whereas it was $347.743 billion previously.
The country’s economic and political situation is deteriorating. Pakistan’s misfortune is that no Prime Minister could have completed his tenure yet.
The government & opposition confrontations are making the situation worse. Pakistan Tehreek-e-Insaf Chairman and former Prime Minister Imran Khan is to give the call for protests to his supporters once again.
Imran Khan says that he will never accept this “imported” government. Khan is demanding immediate and fresh elections.
He says that PTI will not stay patient for too long, if the coalition government keeps pushing us against the wall, we would have no choice but to call for the protests.
Imran Khan also warns the incumbent government that the political instability would falter Pakistan’s economy.
He predicts if Pakistan continues to collapse, it would be difficult to stop due to political unrest.
Former Prime Minister quotes that when the PTI was ruling, the country’s risk rate during that time was 5%, but it increased to 9% due to the no-confidence motion against him.
Imran Khan says that the government said Pakistan’s economy will improve after the revival of the IMF program, but today, Pakistan is facing record high inflation.
Imran Khan compares Pakistan’s economic situation with Sri Lanka saying that it was heading in the same direction.
He said, Pakistan will receive $8 billion from the IMF, the World Bank, and the Asian Development Bank, while the rest of $22 billion will have to be financed from other countries.
Pakistan has to pay debts of $30 billion this year. Imran Khan served as prime minister for more than three and a half years and was removed in a no-confidence vote in parliament by an alliance of all major political parties.
Imran Khan alleges that the vote that removed him was a US-organized plot. Imran Khan alleges that US wanted his removal from office because of his foreign policy choice in favor of Russia and China and because of his visit to Moscow and the talks with Russian President Vladimir Putin.
Whereas, the US Department of State denied any involvement in Pakistan’s internal politics.
Imran Khan came to power in 2018 but could not fulfil his promise to eradicate corruption and revive Pakistan’s economy.
Both the government and the opposition blame each other for the economic instability.
When the coalition government came to power, there was a revival of confidence in the business community, a boost was seen to the stock market, value of the PKR increased, which led to hopes for an improvement in economic stability.
But after a short period of time, the hopes of economic improvement were dashed. The new government increased the prices of petroleum products.
This government accused the former PTI government of deliberately subsidizing the price of petrol over the limit.
Financing for subsidies was not kept in the budget, due to which the country’s fiscal deficit increased.
Unfortunately, the previous government’s decision to grant the subsidy was political and the new one’s decision to maintain it for several weeks was more political than economic, which has had disastrous consequences for the entire economy of the country.
The government imposed a ban on the import of goods from foreign countries to support the economy.
Despite all the tactics, the country’s economy could not be stable. The Nawaz League-led coalition government is still facing a toughness of difficult decisions at the economic level.
Uncertainty in the country and political unrest has become the biggest threat to the economy.
Flood is another factor affecting our economy adversely. The agricultural sector accounts for nearly one-fourth of Pakistan’s GDP at 22.7 percent.
Its massive destruction includes the cotton crop, an important source of income for the country, at a time when Pakistan is struggling with rapidly shrinking foreign exchange reserves and when it is already suffering from severe inflation.
For now, the more immediate challenge facing Pakistan’s economic team is implementing tax hikes and austerity measures as part of its bailout package agreement with the IMF.
This fiscal space will tighten on both sides. On the revenue side, the government is going to lose revenue from the loss of economic activity.
On the expenditure side, the government had to scale up significant humanitarian aid and reconstruction activities.
Political instability perpetuated by the repeated interruption of the democratic political process is a major reason for the absence of a long-term reform strategy required for sustainable economic growth.
There is a severe need for continuity in policy. That can only happen if all political parties agree on some basic charter of economy.
There is a severe need for political stability in Pakistan, because there can be no economic stability without political stability.
—The writer is contributing columnist, based in Islamabad
