The critical juncture at which the present government was formed may prove to be a bane or boon for Pakistan which could be witnessed in the days to come. On one hand, it is confronted with corruption, taxation and fiscal issues on the domestic front whereas on the international front, foreign policy issues (relationship with the US, China-US trade feud etc.) dominate. The present government has to walk a very thin line between prioritizing and balancing national interests with international relations. Now that the 100-days period is over, all stakeholders wait with their fingers crossed as to what lies ahead!
When it came into power, the present government inherited a deficit of US$12 billion out of which US$6 billion were immediately needed to avert deeper balance of payment crisis. On one hand, the government had to tackle a gap of US$12 billion in public finances, whereas, on the other hand, it has to send a message to international markets that it was part of a monitoring program to restructure the struggling economy. The payments position had deteriorated to such an extent that the government had to ask for Saudi help in building up the country’s foreign exchange reserves. So far, Saudi Arabia has remitted US$1 billion to Pakistan and a further US$2 billion is expected to follow within days. It has also agreed to supply US$3 billion worth of oil to Pakistan on a deferred payments basis over the next three years. Other friendly countries were perhaps less forthcoming than expected.
With moderate GDP growth, rising inflation, dwindling reserves, weakening Pak Rupee and uncertainty in the capital, property, currency and commodity markets, the coming days will be difficult for the government. Singular focus on corruption and widening tax base alone will not put the economy back on track. While the initial indecisiveness of the government can partially be attributed to the lack of experience and the complexities of running the country, however, the government has taken some clear policy decision, which augers well for the economy moving forward like the decision to incentivize and support exporters, reduce exporters’ tax refunds, recover the full cost of utilities except from exporters and poor segments of the society, and not interfere in managing the exchange rate parity.
As the dust of harsh realities begin to subside, this article presents following numbers for a preliminary performance analysis:
|Indicator||Aug 2018||Nov 2018|
|GDP Forecast||6.2% (FY19)||4% (FY19)|
|CPI Inflation||5.8% YoY||6.8% YoY|
|Remittances||US$ 2.04 billion||US$ 2.00 billion|
|Imports||US$ 4.46 billion||US$ 4.72 billion|
|Exports||US$ 2.09 billion||US$ 2.06 billion|
|Net reserves||US$ 10.15 billion||US$ 7.29 billion|
|PSDP Allocation||Rs. 1 trillion||Rs. 675 billion|
The first 100 days were a mix of successes and failures. Clearly, the mark has been missed as 100-days agenda stands unfulfilled. It may be argued that it was simply impractical to achieve all the gigantic tasks in 100 days, or even to initiate them successfully, for now, it seems that these promises will have to wait for another year, or perhaps, even more given the intricacies of handling the affairs of the state with a past riddled with corruption, military coups and political instability. The government did not quite succeed in doing what was considered crucial to sustain the growth momentum in the first three months of its rule, however, it did manage to neutralize the opposition.
Setting 100-day agenda was an indication of priorities by the government. It sets a direction but the problems, hurdles and impediments associated with each target due to bureaucratic red-tapism and administrative hurdles may create delays in achieving results in certain areas. For sustained economic development, the nation will have to put up with unintentional delays.