Economy

Listen to the article

Current situation

Currently, Pakistan’s economy is going through a rough patch. There is slow economic growth and increasing fiscal imbalance is preventing the government to cater the needs of the growing population. Pakistani rupee has been devaluing since December 2017 and has lost almost 3.7pc of its value as of now. According to State Bank data released in May 2018, foreign exchange reserves held by the State Bank of Pakistan were shrinking by 3pc on a weekly basis (Mohsin, 2018). In eleven months of 2017-18 fiscal year, the current account deficit has increased to about $16bn (Aazim, 2018). The World Bank states that Pakistan’s inflation is expected to rise in fiscal year 2018-2019 and will remain high till fiscal year 2020 (Mohsin, 2018). Pakistan’s foreign exchange reserves stand at US$ 7 billion which are barely enough to cover a month’s imports. US$200 to 250 million is required every week to cover imports and debt servicing payments. This translates into US$1 to 1.5 billion a month. Our tax base is also too narrow to sustain the present level of expenditure. Years of mismanagement have brought upon the present stalemate.

Dr Ashfaque Hassan Khan, member of the Economic Advisory Council of the Government of Pakistan explains the current situation of economy in Pakistan

Promises

1.Increase in exports by helping the export industries. There will be an office in PM house to facilitate people who are doing business.

2.PTI will put Pakistan in the top 100 economies of the world according to the World Bank’s doing business rankings in five years.

3.We will improve and implement State Bank of Pakistan’s National Financial Inclusion Strategy, drastically increase access to finance, increase deposit base of banks and establish an infrastructure lending bank for large projects.

4.We will establish a Knowledge Economy Authority with cross-sectional powers across government departments.

Progress

14 November 2018

Adviser to Prime Minister for Commerce, Textile, Industry and Investments Abdul Razak Dawood said that it will take some time before Pakistan’s economy can enter a sustainable mode but due to rising exports, investors are looking to invest in the country. Pakistan is also working on free trade agreements (FTAs) with different countries, especially China. Mr. Dawood said that cement sector is playing a pivotal role in infrastructural development of Pakistan and currently six new cement plants in Pakistan are in progress and it is expected that this sector will push its export figures to $1-billion mark soon, which currently stands at $600 million.

3 December 2018

Minister for National Health Services Regulations and Coordination Aamer Mehmood Kiani said that  the pharma industry is playing an important role in the economic development of the country and the government would take all possible measures to create a conducive environment for its growth and export.

6 December 2018

According to Textile Division Secretary Syed Iftikhar Hussain, the government is formulating export-oriented policies to ensure a surge in shipments to overseas markets. He said that the government was committed to providing all possible facilities to the textile sector as it was playing a major role in bringing economic stability. Also, the textile division was working on reducing regulatory duties on inputs in a bid to cut down production cost of export goods.

Federal Minister for Planning, Development and Reform Makhdum Khusro Bakhtyar has underlined that the PTI-led government is undertaking various measures to provide conducive and friendly environment to local industries enabling them to grow and enhance their capacity to boost the national economy.

7 December 2018

The federal cabinet approved a supplementary grant of Rs25.75 billion for the provision of subsidy to the zero-rated export-oriented industries. Additionally, the cabinet approved a gas subsidy of Rs5.5 billion to maintain fertiliser prices at current levels. To minimise the price difference between the imported and local liquefied petroleum gas (LPG), the cabinet further reduced general sales tax from 17% to 10%.

8 December 2018

The PTI government has started the process of establishing a digital platform named the National Single Window (NSW) to facilitate traders in filing import and export documents at one place instead of 42 places and reduce the consignment clearance time at ports to hours from days at present. The new system will cut annual import and export cost by $800 million. The system is likely to be operational by February 2022.

9 December 2018

The PTI government is working on a five-year national tariff policy aimed at boosting exports and expanding the narrow export base. The policy will bring down tariffs on raw material and machinery imports for export-based industries. It will be finalized by June 2019.

26 December 2018

Adviser to Prime Minister on Commerce and Industry Abdul Razak Dawood said that a comprehensive industrialization export policy is being planned to focus on engineering, chemical, information technology and agriculture sectors. He informed that Indonesia had given Pakistan duty-free access for 20 goods including denim and asked exporters to cash in on the facility in order to earn heavy foreign exchange for the country.

Dr. Atta-ur-Rahman, former federal minister for science & technology and former chairman HEC said that a National Task Force on ‘Technology driven knowledge economy’ is being set up under the chairmanship of Prime Minister of which he will be vice Chairman. The task force will cover different areas and emphasis will be laid on promotion of technology and knowledge to attain maximum dividends, including agriculture, energy, water resources and IT sector.

Dr Ashfaque Hassan Khan, member of the Economic Advisory Council of the Government of Pakistan, critically analyses government’s economic plans.

17 January 2019

The exports in textile and clothing group recorded a marginal growth of 0.06 percent during first half fiscal year 2018-19 against same period of the preceding year. The textile group’s exports from the country increased to $6.646 billion during July-December (2018-19).

Cargill renewed its long-standing commitment to Pakistan by announcing plans to invest more than US$200 million in the next three-to-five years. Cargill is a global food and agriculture producer with a strong focus on Asia. Cargill will bring world class innovations to support the dairy and agriculture industry in Pakistan. Cargill’s proposed investments will support Pakistan’s overall economic development and contribute to local employment.

18 January 2019

Pakistani farmers who grow potatoes are facing a tough time due to low prices and in this difficult time, China has expressed keen interest in importing Pakistani potatoes. The offer from China will provide much-needed relief to the growers who are demanding subsidy. In order to encourage the exporters, the government has lifted all the duties linked to potato exports. Pakistan exports the crop to the Central Asian countries, Russia, Malaysia, Gulf states and Sri Lanka.

The Prime Minister of Pakistan Imran Khan chaired a meeting to review progress on China Pakistan Economic Corridor (CPEC) and set targets for short to mid-term phase, focusing on cooperation in industrial, socio-economic, agriculture and Gwadar. It was decided to promote joint ventures in petrochemicals, iron & steel, food and agriculture.

19 January 2019

Dr Ashfaque Hassan Khan, member of the Economic Advisory Council of the Government of Pakistan, talks about the role of exports industry in the economy of Pakistan.

Adviser to Prime Minister on Commerce, Textile, Industry and Investment Abdul Razak Dawood has said that Pakistan will be able to cross its export target of $25 billion for the current fiscal year. He said that government is looking for imports substitution and increasing exports.  The government is involved in talks with China about export of Pakistani sugar and rice.  Currently, Pakistan faces a massive current account deficit which the government is striving to narrow down.

2 February 2019

In order to provide boost to the economy, the government is planning to export donkeys to China. According to KP Livestock department, the government has planned to focus on building donkey farms in order to boost exports. The government plans to export 80,000 donkeys to China during the first three years and this will help improve the socio-economic status of donkey-rearing communities by improving the health and production of local donkeys. The  foreign companies are willing to make a $3 billion investment enabling commercial farming of donkeys.

12 February 2019

Prime Minister Imran Khan said that Pakistan’s exports have increased, and imports have fallen for Jan 2019 compared to Jan 2018 leading to a $1 billion reduction in trade deficit. Further, the overseas Pakistanis’ remittances up by 12.2% from July 2018 to Jan 2019 from same period a year ago and this is an indicator that new economic policies are showing positive results.

26 February 2019

The Ambassador of Azerbaijan H.E. Mr.Ali Alizada called on Federal Minister for National Food Security & Research Sahibzada Muhammad Mehboob Sultan. It was agreed in the meeting that efforts would be made from both sides for the signing of MoU which will increase the volume of Pakistan export of potato, citrus and mango to Azerbaijan.

27 February 2019

Finance Minister Asad Umar chaired the first meeting of PTI Parliamentary Caucus on Economy. The minister briefed the lawmakers about steps taken by the government in the first six months to stabilize the economy. Parliamentary Secretary, Finance, Zain Qureshi briefed participants on incentives given to farmers, including subsidy on urea and reduction in tariffs for tube wells.

5 March 2019

With the recent visit of Crown Prince Muhammad Bin Salman and signing a deal, Riyadh will invest $20 billion, mainly in the energy sector including setting up a $10 billion oil refinery in Gwadar. Saudi Arabia has partly released, $6 billion credit line for Islamabad, including $3 billion as balance of payments support and an equal amount for purchase of oil on deferred payment.

9 March 2019

The Finance Minister Asad Umer said that an agreement has been reached with Abu Dhabi Fund for Development (ADFD) for a loan of $2bn and the amount is expected to be remitted next week. He said that China is also expected to provide $2.1bn in the week thereafter. He said the government is keen to increase deposits to GDP ratio within next five years.

12 March 2019

Dr Ashfaque Hassan Khan, member of the Economic Advisory Council of the Government of Pakistan, talks about the role of business industry in economic sector.

The Punjab government has revealed that their five-year plan is aimed at developing a people-centric growth strategy. Economic managers of the province want to move towards sustainable and regionally equitable economic growth. The plan calls for enabling environment for private sector-led investment and growth by facilitating businesses, investments and by reducing business-related costs. The strategy aims for the growth of 16% per annum in private investment in Punjab.

A delegation of Mitsubishi Corporation, headed by Mr. Kimihide Ando, Senior Vice President /Chief Executive Mitsubishi Corporation called on Prime Minister Imran Khan at Prime Minister’s Office.  Mr. Kimihide conveyed to the Prime Minister that the Government of Japan has decided to increase its engagement with Pakistan and support Japanese companies in increasing investment in Pakistan.

21 March 2019

The Chinese government has offered Pakistan https://www.dawn.com/news/1471165market access for three commodities — rice, sugar and yarn worth $1 billion. The rice shipments to China have already begun as part of the deal which was agreed during Prime Minister Imran Khan’s visit to Beijing and Shanghai in November last year. The exporters have been allowed to ship 200,000 tonnes of rice and 300,000 tonnes of sugar, a total value of $300 million for the year 2019. The agreement also includes market access for around $700m worth of yarn but it seems highly unlikely that Pakistan will have adequate quantity of yarn to export to China as cotton production remains low.

24 March 2019

The ambassador of Japan to Pakistan Kuninori Matsuda said he desired a stronger economic relationship between the two countries and was keen to help build Pakistan’s export base to help it meet challenges. He said the trade ties can be improved by involving public and private sectors particularly in  agriculture, textiles and auto industry.

29 March 2019

The Pakistan government is making efforts to open up a potential 2-million-ton wheat export market in Afghanistan and has begun taking special measures based on demands of exporters. In the first phase, the duration for which goods trucks will be allowed to pass through the Torkham border has been increased to 10 hours and plans are open the border 24 hours a day for exports by August this year (The Express Tribune, 29 March 2019).