Economy

Capital suggestion
There’s more good news than bad. Over the past week, there’s been a rare consensus – the International Monetary Fund (IMF), Standard & Poor’s Financial Services and Moody’s Investors Service have all moved Pakistan’s economy from “stable to positive”.
There’s a consensus that the PML-N has brought the budgetary deficit down from a high of 8 percent of GDP to under 5 percent of GDP. There’s a consensus that the PML-N has managed to jack up Pakistan’s foreign exchange reserves from $11 billion to over $17 billion. There’s a consensus that the rate of inflation during the PML-N tenure has come down from a high of 10 percent a year to under 5 percent a year. The fact also is that the rate of GDP growth, at 4.14 percent, is the highest in the past five years.
For the record, over the past 27 years, our Ministry of Finance has signed 12 IMF programs. For the record, Ishaq Dar is the first minister of finance under whom we have managed to reach the stage of a 7th IMF Review. For the record, this time around, our Ministry of Finance did not seek a single waiver as all programme objectives had been met.
Standard & Poor’s Financial Services, one of the Big Three credit rating agencies, has stated that “Pakistan has made significant progress in stabilizing its economic, fiscal and external performance.” As a consequence, Standard & Poor’s revised Pakistan’s long-term ‘B minus’ credit rating from ‘stable to positive’.
Moody’s Investors Service, also one of the Big Three credit rating agencies (the third one is Fitch Ratings), has “revised the outlook on Pakistan’s foreign currency government bond rating to positive from stable.”
“Baby, you sound good to me. Baby, you sound so good to me. ... like a melody. Baby, you sound good to me.”
Stop right there. Not so fast. No time to rejoice. Pakistan’s economy has been in the Intensive Care Unit for at least the past five years. Our economy has been on imported ventilators assisting our economy to continue breathing. The heart of our economy has been on external pacemakers assisting it to continue pumping. And a whole web of intravenous drips, drains and suction pumps.
This is what Standard & Poor’s and Moody’s are now saying: Pakistan’s economy, in the not too distant future, may be able to breathe on its own. The heart of our economy, in the not too distant future, may be able to pump on its own. And that the doctors, in the not too distant future, may begin to take off some of the intravenous drips. In essence, the outlook is positive.
To be certain, the patient is still in the ICU – and is not expected to come out of the ICU and start running. Yes, the IMF is projecting real GDP growth of 4.7 percent for 2016. But we need to create at least 36 million jobs in the following 10 years – and for that we need an annual GDP growth of 7.5 percent.
Red alert: Whatever we have done so far is not going to take us even close to 7.5 percent growth. What we need to do is structural reforms – and that process has not even begun. What we need to identify is growth drivers – and that process has not even begun.
In the meanwhile, there’s plenty of bad news. Bad news out of the energy sector. Bad news on national debt. Bad news on human capital development. Bad news on industrial production growth. And bad news on government priorities.
Who said: “For most folks, no news is good news; for the press, good news is not news”?
The writer is a columnist based in Islamabad. Email: farrukh15@hotmail.com
Twitter: @saleemfarrukh