THIS refers to the letter ‘Not a collapse’ (Jan 19). It purports to present a rosy picture of the economy and infuse hope in a hopeless situation while facing grave challenges. Even the official published figures of key economic indicators belie the claims of the ministry of finance.

In 2019-20, our exports financed 48 per cent of our imports, whereas in the first half of the current year, this has fallen to 37pc. A trade deficit of $25 billion in the six months of 2021-22 is the highest level ever recorded for the first half.

Outstanding aggregate external debt/liabilities had risen to about $130bn by the end of December 2021 as against $96bn in June 2018. Debt-to-GDP ratio now stands at an unsustainable 90pc. The country is in the throes of a serious debt trap.

The budget for the year projects a gap of Rs3.1 trillion in revenues and expenditure. The deficit is planned to be met by borrowings. US dollars are being borrowed to defray rupee expenditures. It is clearly an approach that may lead to further financial troubles.

Gross financing requirement this year is expected at $28bn and for the 2022-23 fiscal it will be even higher. By the time the government completes its term in August next year, the total outstanding external debt/liabilities are projected to jump to about $160bn.

Agriculture is underperforming and depends on the vagaries of weather. The manufacturing sector remains subdued with existing plants providing little value addition. Most of these plants are assembling or packaging units and hugely dependent on imports for raw material/ingredients.

There is no medium- or long-term economic plan dovetailing a robust agricultural, industrial, investment and trade policy. As such, the economy is being run on the basis of ad hocism.

The desperation for the revival of the International Monetary Fund (IMF) package, including rushing bills through parliament to meet preconditions, corro-borated the notion that without the bailout package, things could not be managed.

Erum A. Baig
Karachi

Published in Dawn, February 5th, 2022