Caretaker Finance Minister Shamshad Akhtar has expressed optimism about the country’s economic recovery, attributing it to the steps taken by the interim government.
This assessment comes after the State Bank of Pakistan (SBP) decided to maintain the interest rate at a high 22% for the next couple of months, citing a decline in inflation from its peak of 38% in May to 27.4% in August 2023.
During a joint press conference with other caretaker ministers, Akhtar highlighted several positive economic indicators:
- Consumer Price Index (CPI) Decline: She noted that the CPI had decreased from over 38% in May to 27.2% at present, which is seen as an important indicator of economic improvement.
- Challenges and Strategy: Akhtar acknowledged that the caretaker government had inherited various challenges but expressed confidence in addressing them one by one. Their strategy includes prudent management of challenges, controlling expenditures, and increasing revenues to improve the economic situation.
- Productive Sectors: The finance minister mentioned improvements in productive sectors, particularly agriculture, which is expected to yield positive results in both minor and major crops. This is anticipated to have a positive impact on the country’s economic growth.
- Industrial Sector: She noted growth in the cement industry and expected further growth as economic activity continues to pick up.
- Services Sector: Akhtar emphasized the significance of the services sector, which is linked with every other sector of the economy.
- Stable Interest Rates: The SBP’s decision to keep interest rates stable at a high level is expected to reduce borrowing costs for industries, which could contribute to their revival.
- Donor Funding: The government has engaged with donors, and Akhtar expressed hope for fast-tracked funding in addition to normal flows. They expect around $2 billion in assistance, with a focus on projects like the Revitalising Informal Settlements and their Environments (RISE) initiative by the Asian Development Bank (ADB).
- Reforms and FDI: The government is working on reforms aimed at benefiting the people and building investor confidence to attract Foreign Direct Investment (FDI). Various initiatives are being undertaken to improve FDI and ensure self-sustaining growth.
- Remittances: Efforts are being made to enhance remittances through formal channels, with Rs80 billion allocated for this purpose.
- Exchange Rates and Reserves: Exchange rate stability was achieved without bank intervention, and the foreign exchange reserves position remains stable.
- Export-Import Bank: The export-import bank is being operationalized to support trade and commerce.
Akhtar’s comments come at a time when many Pakistanis are grappling with the daily challenges of making ends meet. The value of the rupee has reached a historic low, and soaring inflation rates have made it increasingly challenging for the average citizen to maintain a decent standard of living, including affording basic necessities. The exorbitant prices of petrol and skyrocketing electricity bills have only added to the burden on households.
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Despite the interim government’s claims of progress, the general public continues to endure these economic hardships while the government highlights what some perceive as only minor improvements to the challenges inherited from the previous PDM government. It is crucial to bear in mind that Pakistan requires a comprehensive, long-term, and sustainable solution to its complex economic issues.