SUMMARY of the “Inflation and Devaluation” article, Miftah Ismail, Dawn, January 11th, 2024

The article delves into Pakistan’s persistently high inflation, reaching 29.7% in December 2023 compared to the previous year, with year-on-year inflation consistently above 20%. Despite recent positive signs, including a lower monthly increase in December, the writer highlights the root cause – a significant increase in the money supply due to a ballooning budget deficit. Over the past five-and-a-half years, the money supply has surged by over 100%, primarily driven by government borrowing to finance the deficit. The writer emphasizes that the country’s failure lies in not using government spending to boost worker productivity or the economy’s capacity. With a focus on increasing the labor force rather than improving skills and knowledge, the nation faces challenges in achieving » Read More…