The article outlines a comprehensive three-year reform plan for Pakistan to smoothly exit the International Monetary Fund (IMF) program and achieve self-sustained, non-inflationary growth. It highlights the need for domestic reforms beyond merely stabilizing external accounts. To achieve these goals, the government must increase investment, control fiscal deficits, devolve basic services to local governments, address the energy crisis, and reform the civil service. Key reforms include raising the investment-to-GDP ratio to 20% by FY28, controlling the fiscal deficit at 5%, and achieving a primary surplus of 3%. Public investment should rise to 5% through fiscal consolidation, while private sector investments need to grow, especially in SMEs, agriculture, and key industries like petrochemicals and engineering. The country must tackle its recurring balance-of-payments crises by boosting domestic productive capacity in industry and agriculture to reduce reliance on imports. The energy sector also needs reform, including privatizing distribution companies and providing targeted subsidies through the Benazir Income Support Programme (BISP). Additionally, the civil service must undergo modernization, including a merit-based recruitment system and a » Read More…
The article discusses the recent slowdown in the rising cost of goods and services in Pakistan, marking a significant reduction in inflation rates. Headline inflation, which fell to a 44-month low of 6.9% in the previous month, is the result of multiple factors including last year’s high base of 31.4%, falling global oil and commodity prices, stabilization of the exchange rate, reduced demand due to decreasing real wages, and strict monetary tightening. Pakistan’s inflation outlook is looking better, with both core inflation and the three-month average inflation rates dipping into single digits, suggesting a slowdown in imported inflation, especially for items such as energy and food. The State Bank of Pakistan (SBP) has responded to these developments by cutting borrowing costs to 17.5% since June, and private businesses are now advocating for an even more aggressive reduction in interest rates in upcoming months. The editorial also mentions the government’s recent initiative to repurchase costly debt maturing in December at a lower interest rate, reflecting expectations of monetary easing. However, the article notes that the overall cost of living continues to rise despite a lower inflation rate, as consumer expenses for goods and services remain high. This is particularly painful for the middle class, who are still struggling with rising grocery prices, school fees, and medical costs. The editorial cautions against the government’s potential temptation to introduce inflationary measures to stimulate growth in an effort to appease the electorate before » Read More…
The article discusses Pakistan’s current economic situation, which, though not entirely bleak, remains challenging. The government is nearing the end of the stabilisation phase in economic management, with encouraging steps like the debt buyback plan aimed at reducing the burden of maturing Treasury bills. Domestic debt, now nearly 50% of the country’s GDP, remains a significant concern. Inflation has fallen to below 7%, earlier than projected, due to a tightly controlled money supply, validating the State Bank’s high-interest rates strategy. Despite the improvement in some macroeconomic indicators, such as higher-than-expected revenue grants and a better primary balance, uncertainties persist. The latest IMF projections show some improvements compared to May 2024 forecasts, but the economy’s debt burden and external vulnerabilities remain issues that need long-term resolution. » Read More…
The article highlights the severe threats facing Pakistan’s democracy, which has long been undermined by powerful forces within the state, particularly the military establishment. Dr. Niaz Murtaza argues that democracy is nearing extinction, with recent developments signaling its potential burial. He outlines a series of democratic assaults in recent years, including manipulated elections, the politicization of state institutions, disregard for Supreme Court rulings, and the complete dominance of the military establishment over civilian governments. The Pakistan Muslim League-Nawaz (PML-N) and Pakistan People’s Party (PPP), once stalwarts of democratic governance, are now complicit in these undemocratic moves, seemingly operating as extensions of the security apparatus. The article laments the irony of these parties supporting measures that could harm not only democracy but also their own political futures. Dr. Murtaza criticizes the media, legal community, and civil society for their passive acceptance of these attacks on democratic institutions. He warns that these anti-democratic actions will have long-lasting consequences, including the erosion of state legitimacy, increased lawlessness, terrorism, and extremism. The article concludes with a call to resist any moves to subdue the judiciary and preserve what remains of Pakistan’s democratic foundations. » Read More…