The economic team of PTI government has started to claim that its economic policies and measures have stablised the economy. The government ministers continue to blame the previous governments of PPP and PML-N for the economic crisis that emerged during the first 11 months of PTI government. They are claiming to address the economic issues that previous governments ignored. PTI ministers and economic wizard are claiming that they are making the difficult and bold economic decisions to steer the economy out of crisis.
PTI government is claiming to stablise the economy when traders organised a successful country wide shutter down strike. Different industrial sectors are threatening to close down the factories. There is wide spread discontent and anger against the budget and economic policies of PTI government. The workers, peasants, farmers, traders, businessmen and industrialists are protesting in one way or the other against budget, tax measures and economic policies.
PTI government is claiming to stablise the economy when the inflation is on the rise and badly hurting the masses and even middle class. The economic growth rate fall to 3.3 percent and estimates suggests that it will come down to 2.4 percent during the current financial year. The Rupee continues to fall against dollar. The devaluation has already made the imports expensive. The Rupee has already lost more than 35 percent value in just one month.
There seems no end to the volatility and vulnerability of stock market. The stock market is not recovering because the economy is in bad shape. All the economic indicators are pointed out the ailment of the economy. The government ministers and economic team are the ones that still can see the better side of the economic situation.
The exports are not rising but instead it continues to dip further. Despite the huge devaluation of rupee, the exports have failed to make gains. The government continues to borrow more money from abroad and domestically. Both the internal and external loans continue to rise. The PTI government has been borrowing heavily to fill the gap between income and expenditures and to repay the previous loans.
The matter of fact is that we are heading towards a severe economic crisis. There is huge gap between the government claims and economic reality. PTI government’s economic policies and measures are going to bring disastrous results for the economy and people of Pakistan. This financial year will be the worst in over a decade in terms of how it affects the working people of Pakistan.
It was the newly appointed Governor of State Bank Baqir Raza, a man from IMF, who first claimed to bring stability to the Pakistani economy. And then other members of the economic team and cabinet ministers borrowed this term stability from him without realising what it really means. Most of the government ministers have no basic understanding of economics but they like to talk about the economic issues.
He must have been the first to know that Pakistan was well on its way to stability and growth long before the July 3 official approval of the IMF programme. As early as June 17, he had announced that the worst was over, and that ‘the country is moving towards stability’. Let us see exactly what all has led to claims of this stability over the last few weeks.
After his declaration of stability, in the last week of June the Pakistani rupee lost Rs5.50 in value against the dollar in a single day, to miraculously recover Rs6.60 in the week after on July 2. Most economists would call this mayhem, or excessive volatility, but perhaps such events simply imply that the economy was fast ‘moving towards stability’.
Probably the most striking aspect of the calculations from the IMF having ramifications on revenue, jobs and investment is that Pakistan’s GDP this financial year is going to be a mere 2.4percent, the lowest in a decade. If the just-concluded fiscal year ended with a dismal 3.3% growth rate, the lowest in five years, this year of stability promises much more.
Moreover, in the last fiscal year, the first of PTI government, inflation was a mere 9pc, the highest in five years. It was 3.4% in the last financial year of PML-N government. This financial year of stability till next July 2020 promises an inflation rate of anywhere between 13pc and 16pc, probably even higher as the year proceeds. The rising inflation is really biting the working people and lower middle class people very badly.
Every single indicator, from tax collection to the elimination of poverty, to investment rates in industry to achieving an extraordinary 8pc increase in exports, is going to appear in a state of shambles this time next year. The only possible improvement will come to the current account deficit, even as Pakistan’s debt burden, both domestic and international, will increase manifold.
The claims of improvement and stability are far away from everyday reality. It is too early to claim the stability and growth in the economy. The current financial year which started from July 2019, is not going to bring stability, jobs, new economic opportunities, growth and development.
One can safely predict that this financial year will have far higher inflation; the rupee will lose substantially more value, and with fewer jobs and increasing poverty, will be the worst in over a decade in terms of how it affects the working people of Pakistan. The only ‘stability’ and consistency one can expect is that things are going to get considerably worse.
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22 August, 2019