Economy on the upward curve

Courtesy:- Noman Ashraf

The Annual Public Pulse Report for 2014 issued by Gallup Pakistan, maintains that there has been a massive improvement in the ratings for overall performance of the PML(N) government (59%) as compared to the performance of the previous government during last year in the office. Gallup which enjoys the highest credibility for such surveys, claims that economy has recorded positive 48% comparative net performance, Pak-India relations 22%, foreign policy 33%, terrorism control 31%, corruption control 36% and inflation control a positive 20%. 

The graph of popularity of Prime Minister Nawaz Sharif who is the architect of this turnaround is also on the highest rung as compared to other political leaders in the country.
The Gallup report has undoubtedly added credibility to the claims of the government in regards to an enhanced performance in these areas, particularly the revival of the economy. The paradigm shift in the conduct of foreign relations, more so the revisiting of the strategy to deal with India and adopting a policy of non-interference in Afghanistan and building regional linkage for a shared economic prosperity, is a visionary move that fits well into the emerging regional and global realities. 
Moves to improve law and order situation in the country and tackling terrorism have also started showing positive results though a lot still needs to be done in these areas. The indicators in regards to the economy are indeed very encouraging.
When the PM(N) government was installed in May 2013, the economy was on the verge of collapse. The country faced a severe energy crisis. Economic growth rate was below 3%, inflations was at double-digit, interest rates were high, budget deficit stood at 8.8% of GDP, investments were abysmally low, foreign currency reserves stood at the lowest ever level and the country faced default on IMF loans.
It is a verifiable reality that the government, immediately after assuming charge accorded top priority to dealing with the energy crisis. Circular debt of Rs.500 billion was immediately retired which resulted in an addition of 1700 MW to the system easing the position in regards to power outages. With a view to overcome the present energy shortages and also catering to the future energy needs, the government has established an energy part at Gaddani where ten coal-based energy producing plants with a cumulative power generating capacity of 6600 MW would be installed over the next five years. Ground breaking ceremony of a nuclear power plant at Karachi with Chinese assistance which would start producing 2200 MW of electricity by 2017, has also been performed. Steps have also been taken to covert the existing oil-based power plants to coal-based units to curtail the oil bill and also to ensure cheaper electricity to the people in future. Reportedly negotiations are a n at advance stage with the US government and investors to launch new projects in the energy sector. 
The government successfully negotiated a fresh loan of US$ 6.3 billion with the IMF to save the country from default on loans. It has won GSP Plus status for Pakistan that is estimated to boost our exports to EU countries to the tune of US$ 2 billion. The government claims that due to its efforts to reform the economy, inflation has been restricted to single digit , GPD growth rate has been taken to a higher pedestal than the previous year, exports have increased by 5%, remittances have gone up by 9%, decline in the rupee value has been arrested, revenue collection has experienced 16% increase and the government is well on course to bring the budget deficit down to 5.5% from the existing 8.8 % by the end of the fiscal year. Prospects of foreign investment are also very encouraging.
These claims have not only been endorsed by the Gallup but also the IMF and the World Bank. The IMF chief of Mission in Pakistan Jeffery Franks addressing IMF Conference Call on Pakistan recently remarked “The overall economic situation in Pakistan is gradually improving. 
The forecast of 2.8 per cent growth rate during 2013-14 has been revised to 3.1 per cent by IMF which may be a bit on the conservative side. Inflation has been better than expected at around 8% and balance of payments position has also shown upward trend. Foreign exchange reserves have gone up and IMF foresees further strengthening of the reserves. Revenues are coming in as we expected. We believe that by the end of the year Pakistan would likely meet the deficit target and bring down the deficit down to 5.5 per cent of GDP from 8% of GDP last year”. Similar views were echoed by the World Bank. A statement issued at the conclusion of one day visit to Pakistan by the Managing Director of the World Bank said “The increase in country’s reserves is a good sign. Successful review by IMF and rapid implementation of initial reform actions are positive signs”. The World Bank, reportedly, also has agreed to provide US$ 10.2 billion to Pakistan during the next five year for policy reforms in the energy sector, revenue mobilization, governance, social sectors and investment in hydropower.
Another very strong and irrefutable evidence of the revival of the economy and the opportunities thrown open for the foreign investors is the overwhelming response that the issuance of Euro bonds by Pakistan has received. Pakistan has floated these bonds to raise US$ 2billion. The response, encouragingly, came from all geographical regions. Five year bonds were subscribed to the extent of 59 per cent in the US, 19 percent in UK, 10 per cent in other countries of Europe,10 per cent in Asia and 8 per cent by banks, 7 per cent by hedge fund and one per cent by insurance companies and pension funds. In respect of 10-year bonds also most of the money came from US. This response undoubtedly is a result of strenuous and consistent efforts of the economic managers of Pakistan to show case the marked improvement in economic indicators and the success of the economic reforms introduced by the present government, at all the international economic forums. 
The return of Pakistan to the international bond market after a period of 7 years, is indeed a strong indication of the economic revival in Pakistan, no doubt also helped by the confidence shown by international lending institutions like IMF and the World Bank in the reforms set in motion by the government and its achievements during the last 11 month.
The government deserves credit for reviving the economy and improving Pakistan’s image at the global level as a safe heaven for investments. The success story could also help Pakistan in clinching better deals in the upcoming sale of telecom licenses and privatization of the state owned enterprises, so vital to lend momentum to the future growth process.

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