By Masroor Ahmad
The world is witnessing hard times after World War-II as the Covid-19 epidemic has cast shadows on the global economies causing large-scale unemployment and massive economic slowdown. The aftershocks of this economic slump will continue to hover over world arena in the year 2020 and it will take time to recover during 2021. Not only the under developing or developing but also the developed countries are facing serious dilemma. Pakistan, indeed is not an exception from this spectrum as for the first time in the history of Pakistan its economy is ranking in negative. The experts project growth of 1.4% in FY 2021, which is down 0.4 percentage points from latest estimate, and 4.1% in FY 2022. The rapid spread of the COVID-19 virus since February 2020 has brought economic activity to a near-halt. Most of the country has been placed under a partial lockdown. The closure of non-essential businesses and domestic supply chain disruptions are having a significant impact on wholesale and retail trade and transport, storage and communication, the largest sub-sectors of the services sector. In addition, the country’s main industrial sector – textiles and apparel – is highly exposed to COVID-19-related disruptions due to its labor-intensity. Definitely, this situation is not going to linger and there are broader prospects of the substantial growth in Pakistan’s economy due to regional stability particularly after peaceful settlement of Afghan issue and China’s heavy investment through CPEC in the country. One should remember that CPEC has political as well as economic objectives.
However, despite all odds, Pakistan’s progress in the last couple of years is exemplary. Pakistanis are a forward-looking nation who in the past rose many times from chaos and reshaped their history. More recently, Pakistan army has been heavily engaged in fighting off militant organizations that allegedly have contacts with hostile neighbor India and this menace was rooted out from the soil of Pakistan.
The prime reason for the slow economy of Pakistan is not to maintain the pace of industrial growth. Industrial and commercial success in Pakistan has been hampered by insufficient infrastructure and power shortage. CPEC would eliminate these two complications thereby giving the Pakistan economy the boost it has needed for decades. It would mark as a shift in diplomatic and economic independence, out of the clutches of Washington based organizations like World Bank and IMF. CPEC is the largest investment that Pakistan has ever attracted since independence. This is very enlightening that many energy related CPEC projects have already been completed while Pakistan has formed CPEC authority to revitalize the completion of different projects through one window operation.
The Current Account Deficit (CAD) narrowed to 1.0 percent of GDP in Jul-Feb FY20, from 3.5 percent in the same period in FY19, thanks to a 17.5 percent decline in goods imports. In the first half of FY20, the fiscal deficit stood at 2.3 percent of GDP, compared to 2.7 percent in the first six months of FY19. The fiscal adjustment was achieved through increases in domestic revenue collections and slower growth in non-interest recurrent expenditures. On a brighter note, remittances surged by over one-half year-on-year in June. The International Investor Service Moody’s also upgraded Pakistan’s outlook from negative to stable. The rating affirmation reflects Pakistan’s relatively large economy and robust long-term growth potential.
Ehsaas Emergency Cash program was introduced by the Prime Minister in the context of the economic hardship being experienced by the vulnerable due to the ongoing coronavirus crisis. The financial assistance under the program was meant to help them buy rations so that they don’t go hungry. The program covers 12 million families; 12,000 per family, total budget Rs. 144 billion. Exports volumes are on the rise. In FY 2019-20, Pakistan’s total export quantity increased by 12%. The textile industry witnessed 26% growth in volumetric terms because of getting regionally competitive energy tariffs. Significant improvement in FBR tax collections with double-digit growth for first quarter FY 2019-20 (14.8% increase recorded vs the corresponding period last year). The number of income tax returns has also increased by 14% in Q1 2019-20 as compared to the corresponding period last year. Circular debt per month declined by 32% in FY 2018-19 as compared to FY 2017-18. It has further decreased by 54% in FY 2019-20 as compared to the previous year. SBP profits are expected to be more than PKR 400 billion in FY 2019-20 (significant increase as compared to previous years). USD 2 billion foreign investment in debt instruments is expected by the end of the current fiscal year. In addition to this, the government has also launched the Naya Pakistan Housing Scheme. This project of Pakistan government to provide 5 million houses to the homeless people of the country. Similarly, many other projects of the government like Pakistan Bait-ul-Mal’s bio-mass kitchen program for the poor households, Model Langar Khana, Shelter Home programme, Billion Tree programme, Clean Green Pakistan Index, rational foreign policy and opening of Kartarpur corridor will pave way for a brighter Pakistan.
In the upcoming 14th August 73 years will be complete when the independence of Pakistan was won. We, as a nation, have many achievements. We enjoy a unique predestination among the people of the world. Pakistan is fascinating as well as robust. A few years back according to the World Bank Pakistan has the potential of world’s largest and fastest growing middle-class signifying its growth and progress.
As a matter of fact, the critics who thought that Pakistan’s economy would crumble after its independence have been proved wrong. Despite adverse initial endowments in terms of lack of industry, entrepreneurs and civil servants, and despite large Partition-induced transition costs, Pakistan’s economy has registered an aggregate growth rate higher than the population growth rate. In terms of sustainability, stability, and equity outcome of the growth process, the performance in Pakistan has, however, not matched the expectations of its founding fathers either absolutely or relatively to other similarly placed countries but Pakistan will be much better place to live in the days to come irrespective of all hardships and impediments. It is expected that when the dust of corona is settled Pakistan will take a leap forward in all walks of life.