Tehreek-e-Insaf (PTI) came to power on the promise of “Naya Pakistan” and now two years down the road, though the situation is far from perfect, Pakistan is no longer teetering on the edge of collapse.
It may seem repetitive but the PTI government did indeed inherit a structurally flawed economy and without certain measures, it adopted, Pakistan would have faced the bleak prospect of economic collapse similar to that in the late 1990s.
According to an AKD Securities’ report, “The smart albeit difficult decisions of the government have been manifested in a much improved outlook with major sectors already witnessing growth including cement, fertiliser, auto, etc where numbers have consistently picked up pace after multi-year lows on account of Covid-19 pandemic.”
Explaining the quagmire which Pakistan’s economy was in, the report stated, “Our income did not match our expenses and the bubble was eventually bound to burst.”
Hence, when the PTI government came, it was faced with the dilemma of bridging the shortfall, for which it had to turn to its friendly allies, and enter into an International Monetary Fund (IMF) programme. The government initiated a number of reforms, among which was ensuring a flexible market-determined exchange rate, that helped bring the current account deficit to a manageable level.
Lauding the government’s performance, the report added that while the economy was on the mend, the Covid-19 outbreak derailed the entire process. Despite this sudden development, the government tackled the situation well as it undertook quick steps including announcing an economic package worth Rs1.2 trillion, initiating a smart lockdown and lobbying for international deferment of debt payments by poor countries.
Additionally, the central bank announced multiple subsidised schemes for businesses under which Rs138 billion had already been approved for disbursement, it highlighted. The report added that aid to small businesses, particularly small-scale retailers, was needed to protect the vulnerable segment of society. “Planning for the longer term is the need of the hour where Pakistan should capitalise on trade disruptions.” The report also suggested tapping the potential of IT industry in Pakistan.
Published in The Express Tribune, August 6th, 2020.
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