It’s Economics, People!
Pakistan is blessed with abundant natural and vast economic resources, but its economic progress is stagnant and currently economy is teetering on the brink of collapse. Rupee crossed the mark of 100 against a dollar during last week, and it highlighted the deteriorating state of economy.
At the end of January, State Bank of Pakistan released its Annual Report on the State of Economy, and it tried to portray that economy was in good health and was progressing, as State Bank noted that real GDP grew by 3.7% during fiscal year 2012. Report highlighted that growth was broad based spread across all three crucial sectors of the economy. Report also noted that informal sector and remittances from abroad played significant role in supporting the consumption growth. According to the report, the burden on country’s foreign exchange reserves will increase, as foreign inflows has dried up and hence “the burden of financing the current account deficit and external debt has fallen on foreign exchange reserves.”
If State Bank analysis of coming future was not alarming enough, then recent rating of Moody’s Investors Service should be considered as a stark warning of future ahead, as Moody’s retained Pakistan crediting rating is at “Negative-CAA1.”
Moody’s based its assessment on four areas and Pakistan needs real reforms in these four sectors to re-orient its economy. Four areas identified by Moody’s are: “low” economic and governmental financial strength, “very low” institutional capabilities, and very high susceptibility to risks from financial, economic and political events. Moody’s also highlighted that macroeconomic outlook in Pakistan remained bleak, as protracted energy crisis has deterred foreign investment; a chronically weak fiscal structure has led to high government borrowing and inflation, and above all the continued policy uncertainty driven by exigencies of political environment.
In short, Pakistan needs to introduce real economy reforms across all sectors of economy, while bringing a semblance of political stability and sustained policy guidelines to lay the foundations of sustainable economic growth.
And this, my friends, is not going to be possible under the corrupt and stagnant leaderships of PPP and PML-N. You must change yourself to change Pakistan.