The PTI government is claiming to bring economic stability back. The IMF-World Bank and Asian Development Bank are optimistic about the economic stability. The IMF seems satisfied that PTI government is implementing the conditions set out in the agreement to get $6.2 billion as loan. The economic stability that PTI government is claiming has come at a high price. The conditions imposed by the IMF and fully implemented by the PTI government have reduced the current account deficit. The trade deficit has also been reduced.
This has been achieved at the high cost of economic growth. The economic growth rate lowered from 5.5% to fewer than 3%. The poverty and inflation has increased. The imports have lowered as the result of slowdown in the economy. Exports have marginally increased. The unemployment has increased as slowdown in the economy sheds jobs. The economic policies adopted on the behest of IMF resulted in the increased poverty.
With the low rate of GDP growth – it means fewer jobs and economic opportunities. PTI government might achieve the economic stability but not without increasing the unemployment- poverty and inflation. The focus of PTI economic team seems on improving the numbers and to please the IMF while the people are suffering. The problems and miseries faced by the ordinary Pakistanis have increased. But economic team is not bothering much about it.
The Prime Minister Imran Khan seems happy. He looks satisfied with the performance of his economic team. The economic team is happy. But the people of Pakistan are not happy. How could they be happy when they find it hard to feed their families and to find work? Their living standards are going down. The high inflation has lowered their incomes in real terms.
They will be happy when they will find work and economic opportunities. They will be happy when their incomes will go up and living conditions improves. They will be happy when they will get cheaper food- electricity- fuel daily utilities and services. They will be happy when they will start to feel the improvement in their lives. But that is not happening at the moment.
Renowned economist and former finance minister of Pakistan Dr. Hafeez Pasha has estimated that at the end of two years of the Pakistan Tehreek-e-Insaf (PTI) government, 18 million more people may slip into abject poverty due to low economic growth and double-digit food inflation.
In his recent article that appeared in the English daily Business Recorder-Dr. Pasha has said that the national poverty ratio, which was 31.3% in June 2018, would sharply jump to over 40% by June 2020. In absolute terms, people living in poverty will increase from 69 million in June 2018 to 87 million by June 2020, indicating 26% increase in poverty or an addition of 18 million people in first two years of the PTI government.
Eight million (8 million) people have already been added to the ranks of the poor by the end of the first year of the PTI government. He has projected that 10 million more people will slip below the poverty line by the end of the current fiscal year.
He further said that “The situation is very alarming due to an economic growth rate that is close to the population growth rate and an exponential increase in prices of perishable food items.” The government’s decision to simultaneously increase taxes, energy tariffs and devaluation of currency contributed to the increase in poverty. PML-N government’s decision to keep the rupee-dollar parity stable kept the inflation under check. The PTI government is implementing probably the toughest International Monetary Fund (IMF) programme of the country’s history aimed at overpowering fiscal and external accounts challenges.
By June next year, four out of every ten Pakistanis will be poor. At the end of the PML-N government, three out of ten Pakistanis were living in poverty when the poverty ratio had been estimated at 31.3% by Dr Pasha. A year ago Dr Pasha had estimated that national poverty ratio would increase to over 37%, which he now has updated in the aftermath of a surge in food inflation. The food inflation was recorded at 16.6% in cities and 19.3% in rural areas in November over a year ago, according to the Pakistan Bureau of Statistics.
Dr Pasha said that the incidence of poverty fell from 36.8% in 2015 to 31.3% in 2017-18. The decline of 5.5 percentage points implied that almost six million people were taken out of poverty in these three years. The increase in the per capita income is marginal at 0.9%. It might further drop down during the current financial year. He argued that in 2019-20, the GDP growth rate is expected to be close to 2.4%, therefore there will be no increase in per capita income.
“There is a real risk that the incidence of poverty could increase by almost 5 percentage points from the level of 35% in 2018-19. Therefore, by the end of 2019-20, the level of poverty in Pakistan could once again approach 40%,” he added.
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17 November, 2019