PM Imran Khan buckled up the economy but this is too early. The estimated shortfall in balance-of-payments was 12 Billion USD and the country economy was at the edge of collapse but not in reality because of countries never collapse, in fact, people suffer more.
The dramatic slowdown in the economy is not really due to the Imran Khan or his team.
The growth rate from 2013 to 2018 increase every year as the same story of Mushraff’s ten years. I agree on GDP growth but on the other hand, You can see the exports from ended with negative growth from 2013 to 2018.
The economy which brings 5.3% GDP growth in 2018 is actually consumption-led growth and consumption-led growth have to end at some point in time,
The consumption touched 94% of total GDP, the country was running on 2016 IMF bailout package but there no increase in exports and fulfil expenditures requirement we had expense out reserves. The borrowing cost was low but there was no increase in private sector investment. The commercial banks were happy because of the central government taking loans.
Let’s imagine if PMLN came in power again in the 2018 general election they will take days to get IMF bailout package. And the IMF is not easy to partner this time. The Mufita Ismail already showed his concern to devaluation in rupee value before the elections and he also disagrees with the strategy followed in 2013 to 2017 FY by Ishaq Dar.
The PTI government started in July 2018, The PM Imran Khan start running from one friend country to another and bring three billion from Saudi Arabia same form UAE. Meanwhile, Asad Umar presented mini-budget in which PTI government decrease expenditures so that we can pay our 2018 obligations.
The imports decrease by 26% in the first of the fiscal year. we were far behind from the actual exchange rate and now adjusted.
The IMF is the only solution but from this running of PM Imran Khan, we buy some time to negotiate with IMF.
Now in 2019,
The government shall announce an attractive incentive policy for foreign remittance. The government going to bring another mini-budget which will bring a heaven environment for the private investor as Asad said and convert the consumption-led growth to exports-led growth.
The private sector borrowing already increased by 300% compared to the same period of last year even the cost of the loan is 4% more than last year which is a positive sign for exports increment. After almost four decades nationalization of Bhutto, this is the first Government which is truly focusing on export-led growth in instead of consumption-led growth. As of now, we are facing high inflation rate and devaluation of the rupee. The government should not influence currency value, The rupee should manage its value according to the marketing demand and supply.
Still not focused:
The raw material for the textile industry “Cotton” is produced not enough to the current capacity. We have imported 4.3 million bales at 1.2 Billion dollars cost last year. The government announced cheap utilities for the textile industry and private sector borrowing increased that major took by textile investors. These factors will increase demand for Cotton in the market where we already running with shot-fall of almost 4.8 million bales this may cause an increase in the price of raw material for the industry if the government does not manage an easy import of cotton.
The Punjab government announced in May 2018 50% subsidy for cotton growers and focusing on 2025 cotton mission but unfortunately, there is no new type of seed introduce from last 10 year.