March 23, 2022 (MLN): It has been noted with concern that some international publications have published fabricated stories about the state of Pakistan’s economy and the popularity of the Imran Khan-led PTI government, a statement released by the Finance Division said today.
These publications printed extremely biased one-sided articles, ignoring the government’s views or the independent assessments of its development partners, including the IMF, World Bank and Asian Development Bank, he added.
Inflation has become a global challenge, with the US, UK, EU and all emerging markets facing the highest inflation in three decades. Pakistan’s economy is also facing inflationary headwinds due to record international energy and food prices.
“However, in line with our vision of a social welfare state, the government has provided unprecedented relief measures to the masses by lowering petrol, diesel and electricity prices and rolling out the subsidy program comprehensive targeted food programs across Pakistan covering 20 million households (54% of the population). People recognize the measures taken by the government to provide relief to the masses,” he noted.
The statement further adds: “That is why we have seen Imran Khan’s popularity increase over the past few months, with the March 2022 IRIS public survey showing that Imran Khan remains Pakistan’s most popular political leader. with a 35% approval rating over the opposition. leaders Nawaz Sharif (20%), Shahbaz Sharif (8%) and Asif Zardari (4%). Therefore, we see the opposition desperately trying to bring down the PTI government through a vote of no confidence by buying the loyalty of the elected members of the ruling party and its allies.
This latest bout of political turmoil aims to cripple the economy at a time when the economy has shown a rapid recovery from the shock of the COVID pandemic, called by the IMF the worst global economic crisis since the Great Depression of the 1930s. An effective data-driven response has helped Pakistan control the pandemic and outperform other countries. GDP growth accelerated to 5.4% in 2021, following the pandemic-induced contraction of -0.5% in 2020. In comparison, the US economy contracted by -4%, the EU by -8%, India by -7.3% and the Gulf States by -5%, he mentioned.
According to World Bank data, Pakistan has outperformed all regional economies during the COVID 2020-2022 period, with the lowest unemployment rate in the South Asia region at 4.3% compared to India at 8%, Bangladesh at 5.4% and Sri Lanka at 5.9%. . A record fiscal and monetary stimulus package of 2.5 trillion rupees (6% of GDP or $16 billion) was unveiled by the government in March 2020.
The stimulus package focused on emergency cash assistance to 15 million families through the Prime Minister’s EHSAAS programme, the largest social protection transfer ever in Pakistan’s history, covering nearly 45% of the total population. In addition to this, the government has provided free vaccination to over 127 million citizens against COVID, the statement added.
In the current year, the economy is expected to maintain 5% growth with record exports of $30 billion, record remittances and the highest agricultural production on record. Private sector credit growth has doubled in the current year, driven by increased activity in the manufacturing and service sectors. The manufacturing sector has grown by 7.6% in the current year, and the manufacturing index (QIM) for January 2022 posted the highest production on record. The profitability of the top 100 companies listed on PSX showed a growth of 62% in 2021, the strongest growth in the last 10 years.
The statement goes on to say, “Unlike previous boom and bust cycles, the government is focused on sustainable ‘inclusive’ growth. The main risk of a balance of payments crisis was anticipated through early monetary and exchange rate adjustments, and as a result, we are already seeing that the current account deficit has started to decline, falling to 545 million dollars in February, from an average of $1.5 billion over the past seven months. Similarly, on the tax front, tax collections have increased by 30% in the current year, giving the government much-needed fiscal space to take relief measures against the inflation for the public.
Thus, not only is the Pakistani economy on a sustainable growth trajectory, but the quality of growth has also improved significantly due to the “inclusive” or bottom-up approach adopted by the PTI government. Inclusive growth involves providing incentives to middle-income households, smallholder farmers, youth, women and entrepreneurs who are marginalized in the current trickle-down growth system. To this end, the Mera Pakistan Mera Ghar (MPMG) low-cost housing scheme and the Kamyab Pakistan (KPP) scheme have been hugely successful.
According to the SBP, over Rs 366 billion has been disbursed under the MPMG low cost housing scheme, benefiting over 70,000 first time home buyers across Pakistan.
The Kamyab Pakistan (KPP) interest-free loan program promises to increase the incomes and livelihoods of millions of low- and middle-income households. These are households that, for the most part, are unbanked, do not have access to credit and lack the resources to undertake productive economic activity, the statement said.
However, recent developments in international markets are threatening the recovery of the global economy, including that of Pakistan. Record international prices for energy, food and other commodities, combined with rising freight costs, have hit Pakistan hard with inflation reaching 12% in February 2022. However, inflation is not just a problem specific to Pakistan, inflation in the US, UK and EU and emerging markets is the highest in three decades.
As a result, Pakistani authorities have taken unprecedented relief measures to protect the most vulnerable households. The government reduced taxes on all petroleum products to 0% and froze prices at the pump to protect consumers. As a result, domestic consumers pay Rs 150/litre for gasoline compared to Rs 187/litre in Bangladesh and Rs 244/litre in India. Similarly, low- and middle-income households have benefited from reduced electricity consumption through a reduction of Rs. 5 per unit in their monthly bills. Relief estimated at Rs 300 billion has been provided to the masses to shield them from rising international energy prices.
The statement also notes that Prime Minister Imran Khan launched the Ehsaas ration program in March 2022 to relieve more than 20 million households (54% of the total population) on the purchase of essential food items, including flour, legumes and cooking oil. These 20 million households will receive these basic necessities at a 30% discount to market prices. In addition to these measures, the landmark universal healthcare scheme, the Sehat Insaf card, was launched in Punjab and some districts of Sindh and Balochistan in 2022. Over 60% of all households in Pakistan will now benefit from free hospitalization and healthcare, which will save Rs. 10 lakh to every citizen.
The above measures taken by the government are unprecedented and never before has any government provided relief of this magnitude to the masses. As a result of the relief measures taken by Pakistan, inflation should come down in the coming weeks. The latest weekly data from the SPI shows a 1.4% drop in the index, the first weekly drop in more than 7 weeks as a direct result of government relief measures. The PTI government is able to fund higher social security spending due to the difficult and unpopular decisions of the past three and a half years.
The PTI government formed in August 2018 inherited an economy on the verge of collapse. Unpopular reforms, including a market-based exchange rate, reduction in electricity subsidies and the abolition of tax exemptions, had to be taken to reduce the large twin deficits. These reforms have not only allowed us to stabilize the economy, but also to build up reserves to cushion the impact of external shocks, he said.
He also noted that strong diplomacy and active engagement with world leaders and international institutions have also strengthened the economy. Barrick Gold Corp’s recent success in returning to Pakistan for the Reko Diq project will not only save $11 billion in penalties, but will also lead to an additional $10 billion in new investment in Balochistan, creating 8,000 new jobs for the inhabitants. Under the PTI government, we have also made significant progress on the front of money laundering and terrorist financing, which saved Pakistan from the financial sanctions under the FATF blacklist.
“We are confident that Prime Minister Imran Khan will not only defeat the vote of no confidence, but will also lead Pakistan into a decade of strong growth and prosperity based on his vision of a social welfare state,” he said. added.
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Published on: 2022-03-23T21:50:13+05:00