WHEN 2023 started, the main economic challenge was whether Pakistan would default or not. That was the time when there were stampedes for rations just before Ramazan. The International Monetary Fund’s $3 billion Stand By-Agreement averted default and made for a cheerier Eid. However, the period of stabilisation led to some unpleasant records being broken last year.

The rupee spiralled into a free fall, crossing Rs300 against the dollar before rising back up and stabilising. The price per litre of petrol crossed Rs300, and the consumer price index clocked in at a historic high of 38 per cent in May. By December, the food inflation had led to prices for eggs to rocket up to about Rs32 per egg, a new record.

Sky-high inflation was responded to with a tightening of the monetary policy. According to the much delayed State Bank Governor’s Annual Report for 2022-23, the policy rate increased by 825 basis points, in addition to the hike of 675bps in the previous fiscal year. At 22pc, the monetary policy rate is at a record high for Pakistan.

According to calculations by an article in The Express Tribune, price hikes resulted in the average electricity tariff reaching nearly Rs30 per unit. With taxes and surges, the tariff surges up to Rs50 per unit. Gas prices increased by 251pc though its availability dwindled further.

High utility bills generated a lot of demand for solar energy at the grassroots level, but the year also witnessed the money laundering/over-invoicing scam through the import of solar panels. Another scandal briefly reared its head to be forgotten again — the revelation of the names of 628 beneficiaries of the Rs425 billion of the Temporary Economic Refinance Facility extended during the pandemic.

Not all records were bad though. The stock market roared past 67,000 in the last month of the year, its highest peak ever. In the second half of 2023, the Pakistan Stock Exchange gained a whopping 54pc in dollar terms, making it the best-performing equity market globally.

The low base effect allowed another laurel as well: the 115pc increase in foreign tourist arrivals led Pakistan to be the ‘best-performing destination’ in terms of tourism for the first nine of 2023 by the World Tourism Barometer published by the World Tourism Organisation of the United Nations.

The Special Investment Facilitation Council created in June and the Exim Bank of Pakistan launched in December are the tools that hope to deliver enhanced foreign investment and exports in the new year. Whether they will be more pointless acronyms or whether they will deliver will be spelt out in the next few months and years.

Published in Dawn, The Business and Finance Weekly, January 1st, 2024