Falling incomes

The financial troubles the people of Pakistan have been going through cannot be over-emphasised. The figures released by the National Accounts Committee (NAC) last week confirm the public suffering. According to the figures, the per capita income in the country in dollar terms fell to $1,568 in FY23 from $1,766 in FY22 and $1,677 in FY21 – something that indicates a sharp decline in personal incomes and deteriorating standard of living. Another factor pointing towards a slowing wheel of the economy – having a direct bearing on people’s income – is the ominously low GDP growth rate (provisional) for the ongoing fiscal year estimated at 0.29% – registering a sharp decline from the previous year’s 6.1% achieved under the PTI government.

Factors causing such a dismal state of the economy include a historically high interest rate, at 21%, that has turned the working capital extremely expensive and diminished chances of expansion in businesses. Then there is a high flying dollar that has made the import of raw material unaffordable for small businesses, in particular. Moreover, expensive petroleum products and high power and gas tariffs have hugely added to the cost of doing business. No wonder more and more businessmen are either closing shop or laying off staff, thereby triggering unemployment.

A major factor adding to the uncertainty is the elusive IMF deal that is being negotiated since the arrival of the PDM coalition government in April last year. And now that Finance Minister Ishaq Dar has formally stated that the IMF programme may expire on June 30 without revival due to ‘restricted time’ and apologised to businessmen for the hardships they were facing because of an extremely challenging economic situation, there has been growing concern on what alternative plan the government is going to adopt to avert a looming financial default.

Published in The Express Tribune, May 29^th, 2023.

Like Opinion & Editorial on Facebook, follow @ETOpEd on Twitter to receive all updates on all our daily pieces.