Positive signs of recovery – Malik Muhammad Ashraf

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Notwithstanding the flak directed at the government in regards to economic management and the poor state of the economy under its stewardship, there are visible signs of reversal of the trend. There are verifiable economic indicators to suggest the beginning of the process of revival of the economy.

Prime Minister Imran Khan while addressing the ‘Pakistan Strategy Dialogue’ under the auspices of World Economic Forum told his global audience that after enduring the debilitating impact of the first wave of coronavirus and various economic challenges, the economy of the country was now stable and moving in the right direction.

This recovery he claimed happened due to; current account deficit becoming plus after 17 years; clampdown on money laundering by the government; gains by the currency in recent months; revived confidence of the business community and stock exchange in the government policies; vibrancy of the construction and textile industry made possible by the initiatives taken by the government to not only save the economy from adverse impact of COVID-19 but also keep it running.

He has also been making similar claims for the consumption of the domestic audience during the last few weeks saying that the hard times were over and the people would start feeling the gains of the steps taken by the government to revive the economy. Dr Hafeez Shaikh, during his virtual address to the Forum, shedding light on the Economic Strategy adopted by the government said “The government firmly supports the private sector as an engine of growth and believes in building institutional capacity for sustainable and inclusive economic growth.”

The contention of the Prime Minister and the results of the steps spelled out by Hafeez Shaikh have been corroborated by positive developments in the economic arena during the first quarter of the current financial year. The first endorsement of the recovery narrative came from Moody’s which upgraded Pakistan’s economic outlook to ‘stable in August 2020.Reportedly foreign remittance increased by 26.5 percent while foreign direct investments jumped up by 9.1 percent reflecting the confidence of Pakistani expatriates and foreign investors in the newly acquired vibrancy of the economy as a result of the prudent economic policies being pursued by the PTI government. Tax collection also indicated upsurge by 4.5 and primary balance moved into the surplus domain. According to the statistics released by the Pakistan Bureau of Statistics, inflation came down to 8.3 percent in November from 8.9 percent in October. Reportedly, exports surpassed the $2 billion mark in November for the second consecutive month, depicting a rising trend.

As far as the industrial sector is concerned, large scale manufacturing (LSM) registered 4.8 percent growth while the cement sector grew by 20 percent with 100 percent capacity utilisation. An upsurge was also witnessed in the sale of cars, motorbikes and tractors during the same period. The government followed a liberal foreign investment regime and introduced measures to promote Ease of Doing Business (EODB) in the country and as a result, the country’s current ranking on EODB improved from 147 in 2018 to 136 in 2019 and to 108 in 2020.

It is an irrefutable reality that the PTI government inherited an economy in complete shambles which required a time-lag to rectify the maladies and then putting it on the right path. It took nearly two years to grapple with the situation and stabilise the economy through some drastic measures taken to improve the tax collection system as well as introducing macroeconomic reforms. The economy had started showing positive results before the pandemic struck. It severely hit the world economies. Even the developed countries were seen groaning under its impact. Pakistan was no exception and its economy already being febrile was at a great risk.

However, the government, undeterred by the unprecedented challenge posed by the onset of the virus, kept its cool. The Prime Minister, who was fully aware of the situation of the economy and the likely impact on the vulnerable sections of the society from a complete shut down as resorted to by many other countries, stuck to his view that Pakistan could not afford to implement the strategy adopted by other countries. The country opted for a policy of smart lockdowns. The aim was to create a balance between saving lives and keeping the economy going to save the poorer sections of the society and the daily wage earners.

The government, without any loss of time, announced one-time cash assistance to vulnerable families. As per available details the government so far has disbursed an amount of Rs.180 billion among 15 million families representing half of the country’s population with absolute transparency. People were asked to send SMS for the financial assistance and the details of the applicants were scrutinised through data analytics and different parameters to select the most eligible beneficiaries that made sure that no fraudulent claims were made like the BISP. The strategy worked and earned accolades for Pakistan across the globe.

The PTI government gave the status of an industry to the construction sector and announced a package of multiple incentives for the investors in this sector. The construction industry is linked to almost 40 other industries, more so steel and cement which as envisaged has shown very positive results. The provision for loans for low-cost housing was another laudable step to supplement the initiative taken to revive the construction industry but also to enable poor people to build affordable houses.

Agriculture is the backbone of Pakistan’s economy and no real progress can be achieved or conceived without lifting its profile. It has a pivotal role in the overall development of the country. The Prime Minister also approved a Rs.24 billion package to reduce input cost for farmers. Similarly a relief package for Small and Medium Enterprises was also announced to shield against insolvency and joblessness.

The country surely has been put in the right direction due to prudent economic policies adopted with a futuristic approach. However there is no cause for complacency. One cannot predict for sure what is in store for the world and Pakistan in the wake of the second wave of the pandemic and how long it will persist shedding its debilitating effect on the world economy as well as developing countries like Pakistan. The Prime Minister was right in showing concern about the upsurge in the corona cases and appealing to the people to strictly follow the SOPs to mitigate the impact of the pandemic.