THE current fiscal year is but another year lost. Going by the new Pakistan Economic Survey, which maps the state of the economy for the outgoing fiscal year, the economy stabilised, so to speak, as crucial macro indicators perked up even if most budget targets would be missed. But the newfound ‘stability’, aided and funded by the IMF, remains fragile and reliant on yet another larger bailout from the Fund to sustain. The finance minister admitted as much while speaking at the launch of the survey. That the economy rock-bottomed during the last financial year means that any improvement in macro indicators this year would be interpreted as progress. The sad reality is that the economic picture depicted in the survey does not offer much to celebrate or inspire hope about the future. The minister boasted that the nation would start the new fiscal year on a ‘stronger note’. But what exactly does that mean?

Indeed, the economy is likely to have expanded by 2.4pc, at a slightly slower pace than the population growth rate. This growth is driven by an increase in the cotton, wheat and rice crop output rather than industrial recovery. Though agriculture rose by 6.3pc — the fastest in two decades — its dependence on major crops underscores the structural weaknesses in the sector. Industry and the services sector expanded by a meagre 1.2pc each. That means the economy did not produce any new jobs to accommodate the millions entering the market. Then, the government somehow curtailed the current account deficit to $200m in the first 10 months against a target of $6bn for the year. The government has successfully averted default on its foreign payments, built up its international reserves to $9bn, and brought stability to the foreign exchange market. Nonetheless, this external account stability owes to informal and administrative controls on imports at the expense of economic growth, jobs, investment, poverty and exports. Moreover, the government has slightly narrowed its fiscal deficit, which has averaged 7.3pc in the last five years and pushed public debt to over Rs67.5tr and debt expense to Rs5.5tr in the first three quarters of this fiscal to March.

However, this fiscal consolidation forced the government to drastically cut down its expenditure on economic and social infrastructure development, the cost of which will be paid by the economy and people in the years to come. Tax revenue collection has surged by nearly 30pc. Yet this growth has come on the back of the increased tax burden on the working classes and corporate sector. Like the previous year, the current fiscal has been very stressful for citizens as worsening economic conditions, dwindling real wages and high inflation have proved to be backbreaking for low middle-income households. So where is the win? The only silver lining one can see is that while the ship called the Pakistan economy has drifted far off the path, it could still change course provided the ruling elite is able look beyond their narrow vested interests.

Published in Dawn, June 13th, 2024