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Economic optimism and realism

Economic optimism and realism

Dr Miftah Ismail, Adviser to Prime Minister on Finance, Revenue and Economic Affairs, has claimed that the national economy is in a good shape and will grow by six percent this year, which will be the highest growth rate in 10 years. However, in its post-programme monitoring report, the International Monetary Fund has projected the external debt of Pakistan at $103.4 billion by June 2019, up from expected level of $93.3 billion at the end of the current fiscal year. It has also warned that acquisition of further loans could increase challenges and risks to sustainability of debts. Dr Ismail based his good shape of economy rhetoric on remittances sent by the expatriate Pakistanis and foreign direct investments. The government has no role in the two as overseas Pakistanis are obliged to send money to their families in Pakistan and the size of foreign direct investment is meaningless as compared to the FDIs in other countries of the region. It is the habit of the government officials to take the credit of a good work done by others. As a matter of fact, the country’s public debts have already crossed the limits prescribed in the revised Fiscal Responsibility and Debt Limitation Act.

The IMF report has pointed out serious complications faced by the economy as the Pakistan Muslim League-Nawaz government has failed to take concrete measures to maintain fiscal discipline but went on borrowing spree during the last four and a half years of its tenure. The government tried to accumulate foreign exchange reserves on borrowed money which it took from this and that bank on highest markup rates. The mandate of this government is ending this year and the matter of fixing the responsibility of flawed economic policies will go in abeyance. The government has mortgaged every soul of the nation to international donor agencies. According to the IMF, the rising current account deficit and external debt servicing will force the government to seek higher external financing the volume of which could reach $24.5 billion by June this year and around $27 billion by the end of fiscal year 2018-19. If trend of external financing continues, the government will have to seek $45 billion after five years. It is difficult to understand the strategy of the political parties which are locked in horn with one another to grab the power. Ironically, none of the political parties have any development agenda, economic plan or at least a debt retirement programme, but who cares.