Three economic challenges before the PTI government in last two years of its tenure

 PTI government is facing the challenges of rising inflation, current account deficit and import bill

PTI has completed its three years in power. The government of PM Imran Khan is taking credit for stablising the economy.  PTI government also claims that its policies has given right direction to the economy. Despite the tall claims of growth and right direction of the economy, PTI government failed to turnaround the economy for the working people of Pakistan. 

The ordinary Pakistanis continue to experience poverty, high inflation, unemployment and falling incomes. On the other hand, ruling elite and big business continue to increase their profits and wealth. The government policies are benefiting the rich and powerful ruling class.  

If we look at the overall performance of PTI government in last three years, its performance is not more than average. It failed to deliver on its major promises like providing jobs and houses and to end the corruption and nepotism. In last three years, people have seen their incomes and living standards falling as the result of economic crisis.  

PTI has failed to initiate the promised reforms in the system. It failed to bring down foreign and domestic loans instead it added more than Rs 13,000 billions. PTI government continue to borrow and spent policy like the previous governments as it failed to significantly increase the revenue collections. 

Exports have seen some improvement but imports are rising at fast pace. The increased remittances are helping the government to bridge the ever increasing trade gap. 

PTI government has failed to control the rising inflation in last three years. The prices of food, electricity, petrol, gas , medicines and  services are continue to rise. 

In the last two years of its tenure, PTI government will face three major challenges. 

PTI government is facing the challenges of rising inflation, current account deficit and import bill which must be major worry for government. How the people will judge the performance of PTI government in the next elections in 2023 will depend on the performance of next two years. 

A failure to control inflation and to bring down the prices of food and daily essentials could result in the lost of support in the masses. It will be hard for ordinary people to buy the argument of the government that high inflation is not a problem as incomes are also rising. But the reality is that the incomes of working people are not rising. The wages in private sector are not rising compare to inflation. Low income families and wage labourers are finding it really hard to coop with rising prices of food, edible oil, electricity, rents, transport fares and medicines on regular basis. 

Pakistan’s economy was facing challenges on account of rising current account deficit, hiking inflation and increasing poverty as well as unemployment rate. The budget deficit might exceed to 8 to 8.5 percent of GDP, equivalent to Rs 4.5 trillion.

8.5 million People are unemployed in Pakistan at the moment, the highest-ever in the country’s history. The population below the poverty line stood at 38 percent in a post-COVID-19 pandemic.

The PTI government celebrated the decrease in current account deficit as its biggest achievement in last three years. But now current account deficit started to rise again.  The current account deficit is projected to rise to $9 billion to $10 billion for the current fiscal year against projection of $2 billion estimated by the Planning Commission. According to the estimates, current account deficit could rise up to 17 billion dollars if imports continue to rise in next two years.

According to renowned Pakistani economist and former finance minister Dr Hafeez Pasha, the State Bank of Pakistan had projected a current account deficit hovering around 2 to 3 percent of GDP, equivalent to $6 to $9 billion. “It will depend upon how the prices of POL and other imports would remain and the current account deficit might be standing at $9 to $10 billion,” he added.

He said that Pakistan had to repay over $40 billion in loans in the next three-year period. The government borrowed 34 percent on external loans and it is projected to get a 25 percent increase in the current fiscal year, he maintained.

The PTI government also failed to address the agriculture crisis. Pakistan has become from exporter of major crops to net importer. The output prices of agriculture had gone up to 17 to 18 percent but input prices for farmers had increased by 40 percent, so profitability was destroyed. The share of farmers in formal credit had declined. Wheat production was over-exaggerated as production was not 27.2 million tons as the US Department of Agriculture had estimated its production at 26 million tons. 

                                                                   The Editor