According to a report issued by the Institute for Policy Reforms, the government has missed all the economic targets for fiscal year 2016-17 and has lost fiscal consolidation which it had gained in recent years. In its Annual Review of the Economy 2016-17, the Institute claims the economy is losing balance in many sectors and the macroeconomic indicators are appearing as a major cause of concern with alarming level of external vulnerability due to high current account deficit of $12.1b or 4 percent of the gross domestic product. The foreign exchange reserves were available only for less than four months imports and they have still been declining. The beleaguered finance minister has claimed that the country would not go to the International Monetary Fund for another bailout package. Mr Dar has rejected all the rumours that the country is facing an economic emergency and would need a bailout package due to depleting foreign exchange reserves. He also denied the news reports that he is resigning from his post. But all is not well in the country as political chaos is costing the economy billions of rupees daily as investors have held back their money and are waiting for the government policies.
The report hopes the next financial year will be the year of economic revival as tax collections have improved by 21 percent, exports are picking up and energy supply has been improved. However, economists believe the gains could be short lived in the wake of political uncertainty. The economic fundamentals are in the favour of the country which has the economy of over $300 billion. But widening trade deficit are an issue which needs government attention. The country paid $8.15 billion in interest during the last fiscal year, which is 53 percent more than it paid in 2015-16.
As a matter of fact, the increasing revenue generation through taxes and duties are not the true barometer of the economy. Rather, it is the industrial output and its sale in overseas destinations which decides the true health of the economy. The report suggests exports again fell by 1.6 percent in 2016-17 after two years of a double-digit decline. It holds that the lack of planning was responsible for the balance of payment problem. Again, political stability is the basic requirement for economic stability and wellbeing.
