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Getting down to business in 2019: Highlights from Pakistan's economic year

Dawn.com takes a look at the biggest stories from business in 2019.
Updated Dec 27, 2019 01:50pm

The year 2019 was the first full year for the ruling Pakistan Tehreek-i-Insaaf (PTI) government, which tried its best to keep the country afloat.

While there were some improvements and a few applaud worthy initiatives, some of the PTI's measures left a lot to be desired. Here's a look back at the top stories which stood out during the past year.

Please sir, I want some more

— Reuters/File
— Reuters/File

Despite all pre-election pledges of breaking the begging bowl, the PTI-led regime signed a record number of loan agreements worth around $44 billion during the calendar year 2019.

According to seasoned economist Dr Shahid Hassan Siddiqui, the government has increased the burden of liabilities on the national exchequer by $10 billion. In the second quarter of the year, Pakistan reached an agreement with the International Monetary Fund to receive $6 billion over a period of three years.

The agreement not only pushed citizens into hot water but also opened a floodgate of loans and paved the way to bring another $38bn from other creditors.

During the year, the United Arab Emirates' Ajman Bank arranged a loan worth $275m for Pakistan apart from the UAE's $6.2bn support package, while China also delivered a $2.2 billion loan.

The World Bank also approved around $2.473bn worth of loans under various programmes. The Asian Development Bank also pledged to lend around $11.510bn. France also came forward as a major lender for Pakistan with pledges of around $11.843bn while Qatar signed an agreement with Pakistan worth $3bn.

Read more: Pakistan's debt policy has brought us to the brink. Another five years of the same is unsustainable

The FATF black clouds that loom over

Financial Action Task Force President Xiangmin Liu, left, and Executive Secretary of the FATF David Lewis talk to each other after a media conference at the OECD headquarters in Paris on Oct 18. — AP
Financial Action Task Force President Xiangmin Liu, left, and Executive Secretary of the FATF David Lewis talk to each other after a media conference at the OECD headquarters in Paris on Oct 18. — AP

In 2018, Pakistan found itself in the unfortunate position of being placed on the Financial Action Task Force's (FATF) grey list.

At the time, the international watchdog against money laundering and terror financing argued that Pakistan had failed to combat terror financing within its border. In addition, the FATF also forwarded a set of requirements the government had to comply with in order to be taken off the list.

Fast forward to 2019, Pakistan failed to make any progress as the FATF, after seeing no significant improvement in measures taken to combat terror financing, decided to keep the country on the list until February 2020, issuing the country a warning to get its act together or face demotion to the black list.

While the implications of our continued presence on the grey list (or a demotion to the black list) are many, perhaps the biggest is the fact that foreign investors will be hesitant to lend Pakistan money due to the less-than-transparent nature of our financial system, a scenario which will make it nearly impossible for us to meet our current debts.

Read more: Pakistan on FATF’s grey list: what, why, and why now?

What's your budget?

This year also marked the first budget for the PTI government, which was met with severe criticism from the opposition during the parliament sessions on the subject.

The total outlay of the budget was Rs7.022 trillion, focusing on fiscal consolidation, revenue mobilisation, austerity measures and welfare for the downtrodden segments of society.

However, the backlash against the budget stemmed from the introduction of taxes on almost all sectors as well as everyday commodities, a move the government said was necessary to achieve goals underlined in the deal with the IMF.

Read more: Is the PTI budget sustainable for an economy like Pakistan's?

A balancing act

Reuters/File
Reuters/File

Like other spheres of the country's economy, rupee depreciation also saw historic lows — opening floodgates for towering inflation and financial difficulties for the lower-middle class.

The value of the green back against the rupee increased by Rs16 from around Rs139 to Rs155 during the year. By June, the rupee had depreciated to a historic low of Rs164 against the dollar. However, during the second half of the year, the local currency witnessed a recovery phase.

Doing business? Easy!

In the last week of October, Pakistan rose an astounding 28 places on the World Bank's global Ease of Doing Business rankings, landing among the world's top ten business climate improvers. Just the previous year, Pakistan had ranked at 136.

While an ascension in the ranking was indeed a cause for celebration for the government, it should be noted that the study judges using a fixed criteria which is not flawless by any means.

As former member of the prime minister’s economic advisory council, Sakib Sherani, put it: “It is important to recognise that there are far deeper and more meaningful reforms that need to be implemented to bring about a lasting improvement in the country’s investment climate”.

Opinion: Ease of doing business?

What's your outlook, Moody?

In the first week of December, Moody's Investors Services, an international credit rating agency, upgraded Pakistan's outlook from 'negative' to 'stable', while the credit rating remained the same at B3.

Mere moments after the news was broken, the finance ministry, in a statement, called the upgrade an "affirmation of the government's success in handling the country's economy".

However, the report also presented some grim realities highlighting Pakistan’s foreign exchange reserve inadequacy and low coverage of external debt.

“Unless the government can effectively mobilise private sector resources, foreign exchange reserves are unlikely to increase substantially from current levels,” it warned.

Editorial: Moody’s outlook

Traders in turmoil

An elderly man sits at a shuttered market during a countrywide strike against a hike in prices on July 13. — AFP/File
An elderly man sits at a shuttered market during a countrywide strike against a hike in prices on July 13. — AFP/File

The PTI government’s budgetary policies, not the most popular to begin with, were also heavily criticised by traders in 2019, who vehemently opposed their measures to bring all economic activity under the tax net.

The first call for a one-day shutterdown strike came in July, with a majority of traders’ associations in the country rallying behind the cause.

Later, a two-day shutterdown strike was observed across the board in October after months-long talks between the traders and the Federal Board of Revenue (FBR) fell through.

The strike was called off after the government relented and gave traders three more months until a law, which stipulates that a person should provide a copy of their CNIC for purchasing goods worth Rs50,000 or more, will be enforced.

Editorial: Caving in to traders

Prices of essentials soar, and then some more

Photo courtesy Wikimedia Commons
Photo courtesy Wikimedia Commons

Claims of the PTI government being out of touch with ground realities never rung truer when Adviser to the Prime Minister on Finance Dr Hafeez Shaikh, at a press conference, said tomatoes were being sold in Karachi’s markets for Rs17 per kilogramme.

For a brief period of time in 2019, tomatoes, were considered a luxury commodity after prices reached a record Rs400 per kilogramme in Karachi.

This was symptomatic of a larger problem the common man faced this year as the prices of all essential commodities, especially fruits and vegetables, climbed as the government grappled with managing the domestic economy.

Read more: Govt push for taming food inflation

Let's get digital

In 2019, the government also officially launched the 'Digital Pakistan Vision', which will be lead by former Google executive Tania Aidrus.

This is just one of the steps the PTI government has taken to push Pakistan towards a digital revolution alongside approving the first-ever e-commerce policy framework.

Speaking at the launch ceremony, PM Imran Khan said: "This is the most important thing for Pakistan right now, especially its youth. The whole world is moving forward digitally and we have been left behind".

Pinpointing those few opposed to shifting to digital platforms, the premier simply said: "You won't be able to stop us for much longer".

The British are back

— Wikimedia Commons
— Wikimedia Commons

Test cricket was not the only thing that made a comeback in Pakistan after a decade-long absence. In June, British Airways resumed operations after a gap of 11 years. The company suspended operations in the country in the aftermath of a bombing at the Islamabad Marriott in 2008.

Under the new schedule, the airline flies between Islamabad and London thrice a week.

This was another step in the PTI government’s push to promote tourism in the country, alongside introducing a new e-visa policy and officially opening the Kartarpur Corridor.

Read more: Pakistan is uniquely placed to take advantage of religious tourism. What is stopping us?


With input from Asad Farooq

Header illustration by Mushba Said.