THE ROAD TO SURVIVAL

The list of emerging economies issued by the World Economic Forum has ranked
Pakistan’s economy far above India’s, with the former occupying the 47th position as
against the 62nd spot earned by the latter.

In its World Economic Outlook Update, issued on the eve of the WEF’s meeting in
Davos, the IMF acknowledged that Pakistan attained a growth rate of 5.3 percent
during 2016-17 and predicted that the upward trend is likely to continue during 2018-
2019. This economic revival has repeatedly been endorsed by the international
lending and rating agencies and is an outcome of the government’s prudent economic
management during the last four-and-a-half years.

However, there is no dearth of people around us who are bent upon criticising the
economic performance of the country, set in motion by the PML-N government, for
reasons that are invariably divorced from contextual relevance and rationales. As per
the view that is being propagated, excessive borrowing by the government, the foreign
trade deficit, the rising fiscal deficit and debts are going to send the economy into a
nosedive. They are relentlessly trying to promote the idea that the country is on the
brink of an economic disaster. Some Western media reports have also created hype
about Pakistan’s inability to service the accumulating debt.

While the proponents of the doomsday scenario have recognised the existence of these
problems, they have failed to elicit the reasons that have led to these challenges –
which they believe could scuttle whatever progress has been made so far. They have
also hesitated to acknowledge the likely off-setting and the multiplier effect of the
projects on the basis of which this borrowed money has been invested on the future
health and strength of the economy.
The reality is that the government has embarked on a massive programme of
infrastructure development in the country that is considered to be a major driving
force for economic growth – especially under CPEC.

The National Highway Authority reportedly initiated projects worth Rs1,400 billion
during the last four years, including some under CPEC and others to build a network
of roads throughout the country. Some of these projects were initiated on a BOT basis
while other were started through private-public cooperation, CPEC loans from the
Chinese banks on the lowest possible interest rate of 1.6 percent – which, compared
with the interest rates charged by other international lending agencies, is favourable.

Despite its financial constraints, Pakistan also had to divert a large amount of funds to
the war on terror. The economy reportedly also suffered losses worth Rs120 billion
due its involvement in the fight against terrorism. The narrow base of tax revenues is
one of the major factors that necessitated borrowing for development needs. In fact,
Pakistan is one of the countries with the lowest rates of tax collection in the world. It
has long been troubled by the tax problem, which is one of the main reasons for its
fiscal deficit.

Notwithstanding the foregoing constraints and debilitating factors as well as the

volatile political situation in the country, there is no denying the fact that the PML-N
government has been able to pull the economy out of the quagmire that it was stuck in
when th party seized the reins in 2013.

It is a recorded fact that the country was facing the prospect of defaulting on IMF
loans and had to seek another loan from the body to rectify the situation. It is an
irrefutable fact that among other success stories regarding the inherited challenge, the
revival of the economy through prudent economic management has been the most
appreciated and endorsed achievements of the government. The country has seen the
GDP growth rate rise to 5.3 percent (the highest in the last 10 years) in 2017 from a
dismally low rate of three percent in 2013. The budgetary deficit, which stood at 8.8
percent in 2013, was brought down to 4.4 percent – though it has gone slightly beyond
5 percent recently.
There are countless difficulties in managing the economy owing to the factors pointed
out by various critics. However, there are many remedies at hand to fix them and keep
the economy on track. These problems can be addressed gradually through
development to ensure financial sustainability. This is, however, a temporary
phenomenon. Everything will fall into place when all the infrastructural development
projects, including motorways, road networks and the CPEC projects as a whole
become operational. These endeavours are likely to generate economic activity of
colossal proportions that, fuelled by its multiplier effect, would result in an era of
unimaginable economic prosperity.

Economists believe that the prospects for progress and prosperity are much brighter in
the future and the implementation of CPEC would add another two to three percent to
the GDP growth rate. The resources generated by this mega-economic initiative will
not only be sufficient to address the confronting challenges but will also address the
future development needs of the country, which eventually lead to the end of the
country’s dependence on foreign loans for its development projects and fiscal woes.
CPEC has also led to an increase in the foreign direct investment (FDI) in the country.
According to the State Bank of Pakistan, FDI has increased by 56 percent year-on-
year in the July-September period. The major chunk of 65 percent has come from
China.

Another factor that is going to play a pivotal role in uplifting Pakistan’s economy is
the availability of energy for the industrial development of the country, which has
been severely hampered owing to the energy crisis that the government inherited.
These energy shortages had resulted in losses worth Rs14 billion to Pakistan’s
economy in 2015, which is equivalent to seven per cent of the GDP. However, it is
encouraging to note that the production of electricity in the country is 16,477MW as
against the current demand of 14,017MW. This enabled the government to announce
the end of loadshedding.

Under CPEC, power-producing projects, with an accumulated power-generation

capacity of 10,640MW, were initiated. All these projects will become operational in
2017-18. Another 6,645MW of the early harvest projects in the energy sector are also
on the actively-promoted list. This will provide an impetus for industrial development,
improve the employment situation and expand the tax base.

The country’s economic situation is not as dismal as the detractors of the government
and those with other vested interests would have us believe. There is a strong
likelihood that we will attain a higher economic ranking in the future as our current
problems are on their way to becoming extinct.

The writer is a freelancecontributor.

Email: ashpak10@gmail.com