IMF’s neo-projection
It seems there is a change of heart at the IMF as it now sees a rosy picture ahead for Pakistan. This surprising U-turn was noticeable as it upgraded Pakistan’s economic fortunes and went on to forecast that there is a growth projection of 2.5% this year, which could double to 5% in 2025. Nonetheless, the new estimates are not only in sharp contravention to other donors’ predictions that see a dismal growth and impediments all along, the Fund’s largesse has fallen short of the government’s 3.5% GDP growth target for the current year. With inflation sitting pretty cool at, at least, 27% and the purchasing power of commoners in Pakistan coming to a naught, these figures do not make a case for recovery in the near future.
Some of the most ailing issues are the current account deficit at 0.7% of GDP, and unemployment soaring to 8.5% from 6.2% in 2022. Likewise, steep fall in exports and degeneration of local industry along with looming food insecurity are other mammoth irritants that will keep the economy bogged down. Last but not least, the lack of confidence that the World Bank has expressed in the country’s privatisation policy, and the reservations other entities carry while pouring in their investments are in need of being read anew. Merely the Fund’s feel-happy prognosis as it is in a nine-month $3 billion new financing arrangement with Pakistan may be aspects to keep up the ante.
Pakistan is mired in abject political instability which is the main cause of all ills. Efforts on the part of the government to crack down on smuggling, act against hoarders and ensure that the dollar is not traded as a weapon to bleed the rupee are holding water, but these timely successes will need a long-term format as market pressure swings back in weeks and months to come. The Fund’s prescription that it wants the government to tax the rich and protect the poor is the way to go, and this is the only factor that can buoy confidence of the masses and further growth in a consolidated manner. Avoiding default and staying afloat demands more than fudging of figures.
Published in The Express Tribune, October 12th, 2023.
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