Time to pull economy out of suffocation: Hafeez Pasha

ISLAMABAD: Time has come to pull the economy out of suffocation after succeeding to turn the current account deficit into surplus by bringing down the discount rate, which is imperative to stimulate economic activities, said economist Dr Hafeez Pasha while talking to The News.

The PM tweeted saying: ‘’Pakistan economy finally heading in right direction as more of our economic reforms bear fruit. Pakistan Current account deficit has turned into surplus in October 2019 or the first time in four years. Current account balance is plus $99 million in October, 2019 compared to minus $284 million in September 2019 and minus $1280 million in October 2018.

In another tweet, the PM says, “For first 4 months of our fiscal our current account deficit has fallen by 73.5 percent compared to same period last year. Our experts of goods and services rose by 20 percent over previous month and 9.6 percent over October 2018.’’ In a tweet, Adviser to PM Razak Dawood said the statistics for Jul-Oct indicate annual trade deficit may decrease by $12bn to $19bn in the ongoing fiscal year from $31bn during the last fiscal year.

Dr Pasha said that now time has come to stimulate the economic activities in the country and the government needs to let the economy breathe. He said there was a dire need to bring down the discount rate so that private sector could borrow more, but the central bank seemed not willing to reduce the discount rate as it was currently focusing on attracting the hot money. So far, the central bank managed to attract hot money amounting to $700 million, leaving the country’s economy in the lurch.

If this status quo continues, then unemployment would rise more. He said in the last fiscal year, about 1 million people became jobless and the same number of 1 million people will also lose their jobs by end of the current fiscal. He said because of high inflation, the middle class had been impacted by 20 percent. He said the middle class was getting squeezed in the country because of stalled economic activities. Dr Pasha also asserted saying that the armed forces in a goodwill gesture had not increased their budget, but the government increased its budget by 29 percent.