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April 14, 2019

Eight questions

Opinion

April 14, 2019

Highlights

  • On the economic front, the single biggest achievement is the reduction in the current account deficit from $18 billion to $14 billion
  • If our export-import situation is really improving, why isn’t the rupee improving?
  • If gas theft is being checked and the gas companies are being managed professionally, then why is the price of gas going through the roof?

On August 20, 2018, a 16-member new cabinet took oath of office. Question 1: On August 20, 2018, the rupee-dollar parity stood at Rs122 to a dollar. The rupee has since fallen to Rs144 to a dollar. If our export-import situation is really improving, why isn’t the rupee improving?

Question 2: In August 2018, the Pakistan Bureau of Statistics (PBS) reported that CPI inflation “increased by 5.8 percent on [a] year-on-year basis”. In March 2019, the PBS reported “CPI inflation increased by 9.4 percent…as compared to an increase of 3.2 percent in March 2018.” If our economy is headed in the right direction then why is the price level rising at a much faster rate than a year ago?

Question 3: In August 2018, the accumulated stock of circular debt stood at Rs1.14 trillion. By January 2019, the same had risen to Rs1.4 trillion – an increase of Rs260 billion in 137 days. That’s an increase of nearly Rs2 billion a day every day. If the Energy Task Force has the right policy mix in place, why is the circular debt going up twice as fast as it was a few years ago?

Question 4: In January 2018, I consumed 8.756 units of gas and was charged Rs2,184 for every unit. In January 2019, I consumed 10.794 units of gas and was charged Rs6,195 per unit. Why has my bill gone up from Rs22,628 in January 2018 to Rs66,840 in January 2019?

Question 5: On March 24, the gas companies sought a further increase of 141 percent with effect from 1 July 2019. If gas theft is being checked and the gas companies are being managed professionally, then why is the price of gas going through the roof?

Question 6: On August 27, 2018, our finance minister told the media, “We have moved a summary to the cabinet for introducing reforms in the FBR”. On March 18, 2019, Mehtab Haider of The News reported: “In an alarming development, the government has projected highest ever tax shortfall being faced by the FBR in its whole history since inception as this increasing shortfall might touch Rs485.9 billion….” If the FBR is being reformed then what is the explanation behind this historical shortfall in tax collection? Can this shortfall be blamed on the previous government?

Question 7: On August 20, 2018, the KSE-100 Index was at 42,425 points. The index has since lost more than 5,000 points; a loss in capitalization of Rs1 trillion or the equivalent of $7 billion (we are seeking a similar amount from the IMF). If the business community’s confidence is on its way up, why is the stock market down rather sharply?

Question 8: There has been a lot of talk about the ‘Ease of doing business’ – and attracting foreign investment. The most recent SBP data showed that overall foreign investment has plunged a hefty 73 percent over the July-February period to a meagre $1.216 billion. Why?

On the economic front, the single biggest achievement is the reduction in the current account deficit from $18 billion to $14 billion. I am sure the government is doing a hundred good things. Mainstreaming Fata is one such mega undertaking. Providing shelter homes to the homeless is the other good thing. Yes, for the first time ever at least four ministers were made to resign when NAB opened inquires against them. Yes, our foreign policy has had many successes.

PS: The lady who comes and helps us keep our house clean complained to my wife that she had recommended her to vote for the PTI – and now prices are going through the roof.

The writer is a columnist based in Islamabad.

Email: [email protected] Twitter: @saleemfarrukh

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