As has been happened before, Mr. Imran Khan and his aides are tweeting and propagating that during their one year in office, the economy of Pakistan has improved. In this respect they cite some figures of some areas of economy.
But they forget that a country’s economy is like a human body and if any part of it is not well than it has its effect on the whole body. So improvement in one part or two does not make any difference till the body is relieved from fever and pain, in which people of Pakistan are suffering and passing through now a day.
No doubt World Bank has listed Pakistan as ‘Top-20 improvers in Doing Business in 2020’. According to the World Bank, Pakistan has improved in six areas measured by ‘Doing Business’, which are: starting a business, dealing with construction permits, getting electricity, registering property, paying taxes and trading across borders. But whether this listing has any effect on the business activities of Pakistan where business community is on the roads with no business, this has emerged now as the main question now.
The latest State Bank’s latest data shows the current account deficit for July-September FY20 clocked in at $1.548 billion compared to $4.287bn in the same period last fiscal year; a decline of $2.739bn. The reduced current account deficit can be treated as a positive omen for the government, which is struggling with slow economic growth and high inflation. However, despite massive decline in rupee’s value, the country’s exports have failed to register any noticeable increase during the period. In fact the large decline in imports was the real force behind the 64pc reduction in the deficit whereas, exports of goods and services during the quarter increased by a meager 1.38pc or $99 million. The exports services during the quarter clocked in at $7.259bn compared to $7.160bn in the same period last fiscal year. Contrary to exports, the country’s imports fell by 19pc to $13.461bn. On one hand, this massive decline has helped government to reduce the current account deficit, whereas on the other, it has also slowed down the overall economic activity in the country.
The government is also facing major challenge in the form of controlling the huge external debt servicing, which makes up for the major chunk of current account deficit. In FY19, the current account deficit was $13.8bn whereas the debt servicing, in FY 2018 was $11.588bn.
In the FY 2019 the government has borrowed additional funds from the donors, commercial banks and friendly countries, which would certainly increase the total size of debt servicing in future.
In FY20, the government has borrowed from the International Monetary Fund, the World Bank, the Asian Development Bank, commercial banks and other sources to meet the current account deficit, which could not be met despite overseas Pakistanis sending over $20bn in remittances each year.
Further the government expenditure of Pakistan would generally remain stubborn above 22pc. The Fiscal Monitor of IMF 2019 put the budget deficit at 8.8pc of the GDP in 2019 with projection for FY20 at 7.4pc as IMF-supported program comes into force.
The revenue-to-GDP ratio, at 12.8pc, is expected to increase to 16.3pc of GDP during current fiscal year and may further go up to 17.9pc in FY21. This ratio will increase to 19pc in FY22 and then remain unchanged at 19.6pc in FY23 and FY24. The government expenditure will generally keep moving within a narrow band of 22-23pc of GDP all along until FY24. The general government debt at 76.7pc of GDP in FY18 has gone up to 101 % in FY 19 and FY20.
So with increase in people with below poverty line to above 30% (by considering documented economy) and above 70% (by considering undocumented economy), increase in unemployment from 6% to 6.2%, GDP growth rate below 3%, Inflation above 11% with chance of going more than that, SBP discount rate at 13.25%, decline in education and health facilities, nobody on the road can say that economy has improved or on the way of improving except government people sitting in their air-conditioned offices.
PTI supporters say for wait and wait, we are on the way towards recovery but with each passing day hunger and poverty is making people to die, so there is a chance that with the blessings of PTI government number of population of Pakistan may decline. Look towards world. With increase in prices people in Spain, Lebanon, Chile, France and some other countries are on the roads. One should remember that hunger always make people to come on roads or to become a dacoit.
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