Essays

Economic recovery   March 21, 2014
Malik Muhammad Ashraf
 Managing an economy is an arduous undertaking, more so in countries like Pakistan confronted with acute resource constraints, an astronomical national debt, a snow-balling energy crisis, dwindling foreign exchange reserves,  declining foreign investments, a low rate of GDP growth and a volatile law and order situation.
When the present government was voted into power, the economy was on the verge of collapse and the country was in the grip of a severe energy crisis.  Economic growth stood at 3%, national debt liability was around Rs.14,800 billion, inflation was in the double digits, interest rates were high, the budget deficit hovered around  8.8% of GDP, investments were low, foreign currency reserves were depleted and the country faced a default on IMF loans.
The PML (N) government arguably has shown unswerving commitment to revive the economy after completing nine months of its rule. Agreed, this is not a long enough period to fix every economic problem. The performance of the government therefore has to be judged by trends caused by its policy initiatives.
After assuming charge, the government paid off the circular debt of Rs.500 billion which was the cause of power outages. Not only that, the government devised an energy policy which envisages to take care of future energy needs. It has initiated work on an Energy Park at Gaddani where ten coal-based power projects are to be set up within the next five years. The ground-breaking ceremony for a nuclear power plant at Karachi has already happened, and it will start producing 2200 MW electricity by 2017. China has committed to provide US$ 6.5 billion for the project.
With regard to fixing the economy, the government has made considerable progress. It negotiated with the IMF for a fresh loan of US$ 5.3 billion which was necessary to save Pakistan from defaulting on international loans and to revive investor confidence. The IMF has already...