The present Government inherited an economy with severe macroeconomic imbalances that have brought Pakistan to the brink of financial collapse./
Challenges Inherited: shrinking fiscal space, inflationary pressure, mounting current account deficit, growing financing need, exchange rate pressure, and energy sector crisis.
The negative economic consequences of the conflict between Russia-Ukraine are spreading across the world.
The conflict has elevated the risks for Pakistan’s economy in terms of high international prices, significant pressure on external and fiscal accounts. In turn, it can have a profound impact on overall economic activities.
When the PTI government assumed office in 2018, it was their claim that they have inherited an economy on the verge of collapse.
Let us have a brief comparison of the economic performance between PMLN and PTI governments so that people would be able to know the facts that where we left in 2018 and what we have inherited in 2022.
Where we left
2017-18
(Jul-Mar) What we Inherited
2021-22
(Jul-Mar)
GDP growth rate (%) 6.10 5.97
CPI Inflation (%) 4.6 10.8
Policy Rate (%) 6.5
(w.e.f 25-May-18) 12.25
(w.e.f8-Apr-22)
Total Public Debt (Rs.trn) 24.95
(end June)
(63.7% of GDP) 44.37
(end March)
(66.3% of GDP)
Circular Debt (Rs.bn) 1,152 2,467
(up to March 22)
Exchange Rate (PKR/US$) 115.62
(On 08th Apr 2018) 184.69
(On 08th Apr 2022)
FDI $ bn 2,090.7 1,285.1
Trade Deficit $ bn 22.4 -30.1
Current Account Deficit $ bn 13.05 -13.15
Forex Reserves $ bn 17.259
(SBP:11.089)
(Banks:6.170)
(On 8th Apr 2018)
Import cover: 1.6 months
Fiscal Deficit (Rs bn)
1,480.9
3.8% of GDP 2,565.6
3.8% of GDP
Averting the Crisis
Government is making all efforts to secure financial support from friendly countries through bilateral and multilateral arrangements in addition to the IMF program and deferred oil payments.
To cope with inflationary pressures,
Government is ensuring a smooth supply of commodities, checking profiteering & hoarding.
Vigilant monitoring of prices both at the Federal and Provincial levels
Giving targeted subsidies so that the vulnerable people of the society could remain protected from rising oil and commodity prices.
Prime Minister announced a relief package amounting to Rs 28 bn, a monthly relief package of Rs 2000 for 14 mn poor families. The government has sustained pressure to provide relief and full inflationary pressure is not passed on to the domestic consumers.
Complete ban on the import of more than three dozen non-essential luxury items as part of an emergency economic plan to stabilize the national economy.
Government is focusing on expenditure management strategy along with revenue mobilization to create fiscal space by putting less burden on the vulnerable segment of the society.
Salient features of Economic Survey 2021-22
For FY2022, Provisional GDP growth has been estimated at 5.97%,on the back of 4.40, 7.19, and 6.19 % in the Agriculture, Industry, and Services Sector respectively.
LSM (Jul-Mar FY2022) posted a growth of 10.4%(4.2% last year).
Exports (Jul-May FY2022) increased by 27.8% to $ 28.8 bn ($ 22.6 bn last year).
Imports (Jul-May FY2022) grew by 44.3% to $ 72.2 bn ($50.0 bn last year).
Trade deficit (Jul-May FY2022) increased to $43.3 bn (deficit of $ 27.4 bn last year)
Remittances (Jul-Apr FY2022) increased by 7.6% to $26.1 bn ($ 24.3 bn last year).
FDI (Jul-Apr FY2022) decreased by 1.6 % to $ 1455.6 mn ($ 1480.0 mn last year).
Current account deficit (Jul-Apr FY2022), stood at $ 13.8 bn ($ 0.5 bn last year).
Foreign Exchange Reserves (June 2nd, 2022): Total liquid foreign reserves held by the country stood at US$ 15.2 bn ($23.2bn last year)
SBP: $9.3 bn ($16.0 bn last year), Commercial banks: $6.0 bn ($7.2 bn last year).
CPI Inflation (Jul-May FY2022) was recorded at 11.3% (8.8% last year).
FBR Tax collection (Jul-MayFY2022) grew by 28.4 % to Rs. 5348.2 bn (Rs 4164.3 bn last year).
The fiscal deficit (Jul-Apr FY2022) was recorded at 4.9 % of GDP (Rs 3275 bn) against 3.6 % of GDP (Rs 2020 bn last year).
Primary balance (Jul-Apr FY2022) posted a deficit of Rs 890 bn (a surplus of Rs 159 bn last year).
Private sector credit increased to Rs 1,312.9 bn during 1st July-29th April, FY2022 against Rs 454.4 bn last year.
BRIEF
