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Economic growth belies unwanted criticism

Rebuilding a tattered economy is an uphill task and Prime Minister Nawaz Sharif’s economic team led by Federal Minister for Finance Ishaq Dar must be commended for achieving this uphill task belying the claims of political detractors that dollar would reach the Rs 127 mark with no likelihood of the buck coming down below Rs 105.

The steadfastness and sagacity remained the predominant features of Nawaz government’s finance team ever since its coming into power following the last general election. It was also promised in the election manifesto by PML(N) leadership that it would leave no stone unturned for the revival of economy. Now that destination doesn’t seem to be far away.

With the same reference, Nawaz government in general and Finance Minister Dar in particular remained the focus of severe and fiery criticism from many detractors including the political ones namely Asad Umar of Pakistan Tehreeke Insaf (PTI) and Sheikh Rashid of Awami Muslim League (AML). Asad Umar had gone to the extent of predicting, that too in writing in one of his published articles that the dollar-rupee parity would reach the 1:127 mark meaning thereby 127 Pak Rupees would be required to buy one US dollar. Asad Umar’s forecast came at the time when the dollar had temporarily touched close to the Rs 111 figure.

As regards Sheikh Rashid, in his usual fiery tone, he had even ‘threatened’ to resign his National Assembly seat if the dollar ever came down below the Rs 105 mark. This criticism did not unnerve the Finance Ministry team that continued working perseveringly towards meeting the set targets despite so many challenges and hiccups. Throughout these phases marked with criticism and speculative forecast, Nawaz government’s finance team, headed by Ishaq Dar, continued working towards the goal of economic stability with the help of prudent economic planning. And finally, the target was achieved as was earlier promised and publicly declared by the Finance Minister that the upsurge in dollar’s price would come down. And nowadays, we witness a steep fall in the dollar-rupee parity which is 1:103. It certainly means enhancement of the value of Pak rupee against the global instrument of exchange.

On one hand it is the fulfilment of the solemn pledge made by the PML(N) leadership and on the other hand, it is good news for the people of Pakistan that their elected representatives mean business since they are taking up the challenges, especially on the economic front, with complete seriousness of purpose and commitment.

The success in achieving the stability of rupee has also been marked with another success and that is the rise in foreign exchange reserves. The reserves are now very much on the vertical rise and they are set to reach the $10 billion level by the end of the current month ie by March 31, 2014. The same pace of rupee stability is being ensured further through sustained economic growth policies and action plans that will enable the foreign exchange reserves’ upsurge to the $16 billion level by the end of the current year ie by December 31.

Now this is not merely like rebuilding an economy that was in tatters when the PML(N) was entrusted the governance of Pakistan by the people of Pakistan. It is rather like reconstructing the country whose systems had been badly impaired due to bad governance and poor prioritisation on the part of former governments. PML (N) government, under the guidance of Prime Minister Mian Nawaz Sharif, took it upon itself to do away with all these bottlenecks and put the national economy back on the track of progress and growth. The results have started coming and more positive developments are expected in the foreseeable future.

Even the international community has voiced appreciation for Nawaz government’s strategy for rebuilding of the economy but back at home, the government remained under criticism from various quarters that were not willing to evaluate the things objectively in their true perspective. At the time when the dollar was traded at somewhat around Rs 111, some economists voiced their concerns on the difficulties that might come Pakistan’s way by agreeing to a programme that would again seal the reputation of Pakistan as a ‘single tranche country’. This ‘single tranche country rhetoric’ was projected at times without proper insight into the actual working plan of the Nawaz government as the detractors expressed skepticism that there were hidden provisions that would result in major devaluation of the currency, increase inflation and force wholesale auction of public sector assets at throw-away prices.

These critics were rather reluctant to wait for the results although economic strategizing always takes time for results to emerge. If one looks at the quarterly national accounts, released by the Pakistan Statistics Bureau for the first time, a GDP growth rate of 5% in the first quarter of 2013-14 has been recorded compared to 2.9% in the first quarter of 2012-13. Growth has also been recorded in the service and industrial sectors. For instance, the large-scale manufacturing sector has posted a growth rate of 5.2% during the period July-November 2013-14 compared to 2.2% for the same period last year. The key sectors showing growth include fertilizer (33%), paper and board (20%) electronics (19%), and textiles (2%). This growth is also reflected in better domestic sales tax collections, which rose by nearly 30% during this period. Two other developments further strengthen the view that the growth momentum is gradually picking up. First, the flow of credit to the private sector has increased manifold. From a meagre amount of Rs 53 billion in the first six months of 2012-13, credit to private sector increased to Rs 231 billion, much of it was for fixed investment.

One of the formidable challenges, apart from the huge circular debt of the power sector was that of inflation. But now these inflationary pressures have started to ease. Authentic statistics suggest that inflation is now stable in the single digit territory in majority items of use except the highly volatile items of food and oil but even this area is receiving full attention from the government’s economic planners. As compared to inflation in November 2013, prices in December 2013 and January 2014 have witnessed reduced momentum.

Due to the prudent economic policies of Nawaz government, budget borrowings have reduced drastically. As against an IMF target of 3.5% for the first six months, budget deficit has been recorded at 2.2%, even better than 2.6% actual recorded in the same period last year. Exports are also picking up: The exports (fob) were up by 3.2% in the first six months, compared to the same period last year. The most significant increase was recorded in textiles exports, which increased by 8%.

The results that have emerged in such a brief period of time- eight/ nine months- are really encouraging and they tell us of the determination of Prime Minister Mian Nawaz Sharif, Finance Minister Ishaq Dar and their entire team to raise a strong bulwark against economic decline for all times to come. Once this ideal is achieved, which now seems to be a strong possibility, the nation can easily take pride in its genuinely sovereign nation status, free from all shackles whatever.

S Rahman, "Economic growth belies unwanted criticism," Business recorder. 2014-03-12.
Keywords: Economics , Economic issues , Economic policy , Economic growth , Economic development , US dollar , Economy-Pakistan , National Assembly , Investment , Asad Umar , Sheikh Rashid , Ishaq Dar , Pakistan , PMLN