An ‘outstanding’ performance
Pakistan’s business community has shown great confidence in the caretaker government, fully backed by the military, led by Chief of the Army Staff General Asim Munir.
Its performance has remained “outstanding” in a short period of about three and a half months, which includes economic growth of 2.1% in the first quarter of the current fiscal year, the rupee remaining stable around Rs285/$ over the past two weeks and the Pakistan Stock Exchange (PSX) registering the fastest growth in 20 years at 50% in only five months, hitting a record high above 61,000 points.
Recently, the National Accounts Committee (NAC) has reported the economic growth at 2.1% for the Jul-Sept quarter. However, it revised down the growth rate to negative 0.17% for the previous year ended June 30, 2023 from the earlier reported 0.3% expansion.
Pakistani currency has regained almost 8% (or Rs22) to Rs285/$, recovering from the historical low of Rs307/$ hit in the first week of September 2023.
PSX’s benchmark KSE-100 index has tested all-time highs above 61,000 points compared to the five-month low of around 40,000 points reached in June 2023.
Talking to The Express Tribune, Arif Habib Limited (AHL) Chief Executive Officer Shahid Ali Habib said “the caretaker government’s economic performance has remained outstanding. It has taken a number of measures to stabilise the economy, which will provide a strong ground for the much-needed growth.”
Exchange Companies Association of Pakistan (ECAP) President Malik Bostan said “the caretaker government has taken tremendous economic measures in a very short period of three and a half months (Aug 15 to Nov 30, 2023).”
“It is believed that it will continue to do economic wonders in its remaining rule till early February 2024.”
PSX MD and CEO Farrukh H Khan said that timely completion of the International Monetary Fund (IMF) review played a pivotal role in taking the market to new highs.
The review would lead to the release of next tranche of $700 million sometime in December and unlock another $1.5-2 billion in financing from other multilateral and bilateral creditors, he pointed out.
AHL CEO Habib added that the biggest positive initiative taken by the caretaker government was the end to gas subsidies, upward revision in the fuel price and control over the power-sector circular debt.
Apart from that, foreign direct investment (FDI) is being attracted through the Special Investment Facilitation Council (SIFC). “This is a great achievement,” he remarked. They have stabilised the rupee-dollar parity, boosting investors’ confidence. At the same time, inflation has peaked out.
Keeping that in view, the State Bank of Pakistan (SBP) is expected to cut its key policy rate by seven percentage points to 15% over the next 13 months till the end of December 2024.
“All such developments have improved the ecosystem,” he said, pushing the PSX to a new record high. The market is projected to further rise 25-30% to 75,000-80,000 points, AHL Research projected. Most importantly, the government’s plans to privatise the loss-making state-owned enterprises (SOEs) are highly encouraging, if it successfully stops the bleeding of precious financing by such institutions.
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“They (caretaker government) should fast-track the privatisation of institutions as the next government after February 2024 polls may derail the process a little bit,” Habib emphasised.
Commenting on the stock market’s record-breaking spree, PSX MD Farrukh Khan pointed out that the caretaker government had taken some tough economic decisions which were supporting the ongoing rally at the PSX.
“The market has surged ... in the wake of early signs of economic recovery and the announcement of general elections date,” he added.
ECAP President Bostan said the IMF and World Bank had praised the economic measures taken by the caretaker government, adding that the economic turnaround was the greatest sign of the positive steps.
He cited a survey conducted by the Overseas Investors Chamber of Commerce and Industry (OICCI), which showed an improvement of seven percentage points in business confidence in the previous six month. “This is a self-explanatory statement from the trade body of foreign investors.”
In one of the significant steps, the government has succeeded in stabilising the rupee-dollar parity through a crackdown on foreign currency smugglers and hoarders as “administrative measures had been due for a long time”.
The caretaker government has also unearthed water and power theft worth over Rs200 billion. SIFC, with the backing of Pakistan Army, was also attracting $50-100 billion investment in Reko Diq mining project, IT and telecom sectors and agriculture, he said.
Among other recent developments, Pakistan’s regional exports increased 14.21% in four months while Kazakhstan was looking for more textile imports from Pakistan, offering a $2 billion market. Meanwhile, the UN Food and Agriculture Organisation is working on 40 ambitious projects to revolutionise the agriculture sector in Pakistan. Besides, the Economic Coordination Committee of the cabinet has approved Rs423 million in supplementary grant for targeted gas projects in Sindh.
Recently during the prime minister’s visit, Pakistan and Kuwait signed seven MoUs in the areas of manpower, energy and defence, sealing $10 billion in investment deals.
Also, Pakistan and the UAE inked MoUs worth billions of dollars. The emirate’s mineral giant NT plans to invest around Rs2.5 billion in establishing a mineral-based venture in Pakistan.
The government has decided to launch Rs6.8 billion worth of health programmes, ordered the illegal Afghan nationals to return to their home and put curbs on the illegal entry of goods under ATT.
Published in The Express Tribune, December 1st, 2023.
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