ISLAMABAD – The news is not very good for Pakistan which has been facingeconomic turmoil since last many years due to rampant corruption andill-conceived economic policies pursued by the successive governments.Almost for last ten years, all the economic fundamentals are going againstus.

The exports are falling, the unchecked imports are rising, trade deficit iswidening and current account deficit touching alarming levels, unemploymenthas reached worrying heights and rich-poor gap is posing a nightmarishscenario, further compounded by massive corruption at all levels.

Remittances are down as compared to the corresponding levels and trends inthe previous years due to falling number of workers, proceeding abroad foremployment due to ill-conceived policies.

The average daily earnings of employed population is below $1.90 andpurchasing power parity is 8.6%. The World Bank in its recent report“Pakistan Development Update”, stressed Islamabad to have an “able taxadministration” to broaden extremely narrow tax base. The report alsostressed need to devalue the rupee against the US dollar, saying anovervalued currency severely damaged exports.

The World Bank said that Pakistan’s reliance on short-term foreigncommercial loans has significantly increased and the government obtained$5.8 billion short-term loans in just two years. “These facilities ofrelatively short horizons can create repayment issues in the future,”warned the Washington-based lender.

In its updated flagship economic publication Asian Development Outlook(ADO) launched recently, it said that the growth projections for next yearwere retained for all economies of South Asia except Pakistan, which ishigher, and Sri Lanka, which is lower. “As such-and assuming furtherimprovement in energy supply and security, and likely recovery in cottonand other agriculture, the growth forecast for FY 2018 is revised up to5.8%”, the report added.

The report further said that a major impetus to growth in FY 2017 andbeyond would be the implementation of $52 billion CPEC program ofinfrastructure spending on roads, railways, pipelines and electric power inan economic corridor project linking Pakistan with the People’s Republic ofChina (PRC), which was announced in April 2015. Fast-tracking would enableseveral energy projects to come on stream in FY 2018, report added.

The government significantly strengthened macroeconomic fundamentals andadvanced a comprehensive program of structural reform under a 3-yearprogram with the IMF that ended in September 2016. Inflation has beensquashed to the low single digits, foreign reserves rebuilt, and the budgetdeficit markedly reduced. Tax reform was launched to improve revenueperformance, and substantial progress achieved toward restructuring thepower sector.

Key challenges remain, however, regarding governance and security issues,reviving agriculture and improving its productivity, increasing exports andattracting investment, strengthening public enterprises, and improving thebusiness and regulatory environment.

The government however claims that budget for FY 2017 projects furtherreduction in the deficit to 3.8% of GDP achieved by adopting new revenuemeasures and streamlining current expenditure.

Tax revenues are projected to increase by half a percentage point, raisingthe ratio of tax to GDP to 12.8% by eliminating more tax concessions andexemptions, expanding the withholding system as part of administrativereform to widen the tax base, and raising some excise taxes and customsduties, the report added. Inflation is now expected to average 4.7% in FY2017.The upward revision takes into account expected oil price rises andstronger domestic demand in an increasingly supply constrained economy.

It is tempered by the prospect of a broad agricultural recovery and onlymodestly higher global food prices. The July 2016 Monetary Policy Statementcovering the first 2 months of FY2017 kept policy rates unchanged as thecentral bank continues its cautious forward-looking approach, expecting tohold inflation within the range of 4.5%-5.5%.

The report observes that the current account deficit was expected to widenin FY2017 to about $5 billion, or 1.6 % of GDP, which is higher thanforecast in March. The revision reflects a somewhat greater increase inglobal oil prices than expected and continued expansion in other importsstemming from faster economic growth.

On the positive side, there is an increased activity in FDI and renewedinterest of the foreign multi-national companies from Europe, Russia andUSA to put their footprints in the country, mainly due to confidence in oureconomic agenda and of course CPEC. Pakistan and European Investment Banklast week agreed on co-operation in the Energy conservation and Energyefficiency sectors.

A Russian consortium of investors were last week in Pakistan and signed anagreement to put up a oil refinery having a capacity to 200,000 barrels ofoil per day. According to an OECD report regarding Pakistan’s overallratings with regard to Finance and Banking and Taxation, it is largelycompliant with the international standard.

Pakistan’s legal framework ensures that ownership information, accountingand banking information is available and can be obtained in line with thestandard. The main findings of the report relate to a room for improvementin supervision and enforcement of obligations ensuring availability ofownership and accounting information.

Pakistan is also recommended to improve its response times to requests forexchange of information. The report further notes a potential ambiguityconcerning rules regulating confidentiality of information exchanged underPakistan’s agreements. Since the cut-off date of the review, Pakistan hasnevertheless taken steps aiming to address this issue.

One of the major pillars of our economy are the worker’s remittances. Sincelast three years we are witnessing a downward trend in the number ofworkers proceeding abroad for employment which has seriously affected ourremittances from abroad. It is a natural consequence. But the most worryingpart of this alarming situation is that this debacle is due toill-conceived policies and sheer negligence on the part of concernedministry.

No effort has been made to explore new markets for our trained, skilled andhardworking manpower and no action has been taken to tap traditional hostcountries. Qatar, a promising market for our work force only employed 7000workers from Pakistan and Kuwait still hasn’t lifted ban on recruitmentfrom Pakistan-a setback on diplomatic front.

Pakistan still remains in grip of massive corruption at all levels. Publicsector is the most affected and culture of commissions and kick-backs isflourishing in spite of commendable actions of NAB.

Government must act with an iron hand and come down heavily on corruptelements. Our system look completely out-dated and our actions seemthoroughly devoid of morality.

This mentality has to change. There is a hope that if the rules arestrictly enforced for everyone and government gets tough with violatorsthings might change for the better.

Mahrukh A Mughal — The author, a freelance columnist, is based in Lahore.