A bet­ter eco­nomic fu­ture

The Pak Banker - - EDITORIAL - Malik Muham­mad Ashraf

RE­PORT­EDLY, the vis­it­ing World Bank Pres­i­dent Dr. Jim Yong Kim in his meet­ing with Prime Min­is­ter Nawaz Sharif ex­pressed full sup­port for the tough eco­nomic de­ci­sions of the govern­ment in re­gards to struc­tural re­forms and ac­knowl­edged the fact that Pak­istan had achieved phe­nom­e­nal suc­cess in re­gards to im­prove­ment in the se­cu­rity sit­u­a­tion, ar­rest­ing the bur­geon­ing en­ergy cri­sis and bring­ing macro-eco­nomic sta­bil­ity. He re­marked that es­cape from the risk of bank­ruptcy that Pak­istan faced in 2013 was a big gain for the coun­try. Later speak­ing at a func­tion of the State Bank he stated that Pak­istan was poised to per­form bet­ter on the eco­nomic front and lift­ing peo­ple out of ex­treme poverty.

The en­dorse­ment of eco­nomic re­vival and im­prove­ment in the se­cu­rity sit­u­a­tion by the head of a pres­ti­gious in­ter­na­tional lend­ing agency like the World Bank un­doubt­edly re­in­forces the cred­i­bil­ity of the govern­ment claims in this re­gard. The sit­ting gov­ern­ments all over the world have the dis­ad­van­tage of in­cum­bency and cri­sis of cred­i­bil­ity and there are al­ways diehard crit­ics of the govern­ment who in­vari­ably have a cynic view of the claimed achieve­ment of the govern­ment and even try to den­i­grate ev­ery­thing as­so­ci­ated with the govern­ment. The best re­buff to their an­tics and machi­na­tions is the en­dorse­ment of those achieve­ments from the in­de­pen­dent sources. What the World Bank Pres­i­dent has said should be enough to si­lence the crit­ics of the eco­nomic agenda and eco- nomic strat­egy of the govern­ment.

The World Bank in recog­ni­tion of the im­prove­ment in the state of the econ­omy has al­ready agreed to pro­vide $ 10.2 bil­lion to Pak­istan dur­ing the next five years for pol­icy re­forms in the en­ergy sec­tor, rev­enue mo­bi­liza­tion, gov­er­nance, so­cial sec­tors and in­vest­ment in hy­dro power. It is per­ti­nent to point out that not only the World Bank but also ADB and IMF have re­peat­edly ac­knowl­edged the turn-around in the econ­omy and the suc­cess of the eco­nomic ini­tia­tives of the govern­ment. The in­ter­na­tional me­dia is also on record to have ap­pre­ci­ated this suc­cess story.

Man­ag­ing an econ­omy like Pak­istan is prob­a­bly the most ar­du­ous un­der­tak­ing, es­pe­cially re­viv­ing an econ­omy lan­guish­ing at the edge of a precipice. When the PML-N govern­ment was in­stalled in May 2013, the coun­try faced a se­vere en­ergy cri- sis. Eco­nomic growth was below 3%, in­fla­tion was at dou­ble digit, in­ter­est rates were high, bud­get deficit was at 8.8% of GDP, in­vest­ments were abysmally low, for­eign cur­rency re­serves stood at the low­est ever level and the coun­try faced the prospect of an ig­no­min­ious de­fault on IMF loans.

To be­gin with, the govern­ment with­out wast­ing a mo­ment, suc­cess­fully ne­go­ti­ated $6.4 bil­lion Ex­tended Fund Fa­cil­ity with the IMF to avoid de­fault on IMF loans. With a view to fix the mal­adies af­flict­ing the econ­omy and mak­ing it a vi­brant agent of change the govern­ment rightly fo­cused on macro-eco­nomic struc­tural re­forms, ex­pan­sion in tax net, in­vest­ment in in­fra­struc­ture, tack­ling en­ergy cri­sis and ini­tia­tives aimed at re­duc­ing bud­get deficit. Con­se­quently a dis­cernible turn around in the econ­omy has been ef­fec­tively or­ches­trated.

The bud­get deficit which stood at 8.8% in 2013 has been brought down to 4.8%, in­fla­tion has been re­duced to 4.53%, credit to agri­cul­ture sec­tor has in­creased to Rs.515.87 bil­lion, de­vel­op­ment spend­ing has touched Rs.427.67 bil­lion, GDP growth which was in the vicin­ity of 3.1% has been en­hanced to 4.24%, per capita in­come has in­creased to US$1513, for­eign ex­change re­serves have reached the high­est ever US$ 20 bil­lion mark and stock ex­change has touched new heights. The con­fi­dence of the in­ter­na­tional in­vestors in Pak­istan has also been strength­ened as was ev­i­dent from the re­sponse that Pak­istan re­ceived on the is­suance of Euro Bonds which came from all ge­o­graph­i­cal re­gions of the world. This re­sponse un­doubt­edly was a re­sult of the stren­u­ous and con­sis­tent ef­forts of the eco­nomic man­agers of Pak­istan to show­case the marked im­prove­ment in eco­nomic in­di­ca­tors and the suc­cess of the eco­nomic re­forms in­tro­duced by the present govern­ment at all the in­ter­na­tional eco­nomic fo­rums.

The suc­cess of the fore­go­ing ini­tia­tives de­pended on im­prove­ment in the se­cu­rity sit­u­a­tion in the coun­try, es­pe­cially tam­ing the threat­en­ing phe­nom­e­non of ter­ror­ism. The PML-N govern­ment, hon­estly speak­ing, showed rare courage by launch­ing a cru­sade against ter­ror­ism in the form of Op­er­a­tion Zarb-e-Azb and Na­tional Ac­tion Plan with the con­sen­sus of all the political forces rep­re­sented in the par­lia­ment and the un­qual­i­fied sup­port of the mil­i­tary lead­er­ship. The suc­cess of the op­er­a­tion and other ini­tia­tives of the govern­ment has un­doubt­edly im­proved the se­cu­rity sit­u­a­tion in the coun­try.

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