According to newspaper reports, the International Monetary Fund has warned the oil importers, including Pakistan, of possible increase in the oil prices in the international market which could create balance of payment problem, undermine consumption, increase fiscal risks, and worsen external imbalances in their respective countries. The reports believe the oil importing countries will have to pay 30 percent more in 2017 than the last year and it can shake the economic stability in certain countries. However, the fund hopes the downside risk would be partly offset by higher remittances sent by Pakistani expatriates from abroad. The report says that low oil prices and reduced subsidies proved to be beneficial for Pakistan and other countries as savings from low oil bills allowed them to spare funds for the development of infrastructure, improve healthcare system, and spend more on social sectors. The IMF warns that the possible increase in oil prices will render it difficult for the countries to maintain their spending as usual. The low oil prices enabled Pakistan to reduce fiscal deficits and improve the business climate. Besides, the local and foreign investment has spurred growth in the country. The fund predicts four percent growth in 2017 in the region from 3.7 percent in 2016.The regional growth will further increase to 4.4 percent in 2018.
There will be grave effect of oil imports on the economies, which can only be offset by streamlining the financial and business affairs. Most of the countries are facing lethargic official attitude as officials want to maintain status quo for the benefit of their personal affairs. But the emerging circumstances and situations are screaming for urgent reforms. All the economic sectors are interconnected and heavily influence one another. Bad performance in one sector can affect the whole economy as was happened in Pakistan due to weak cotton production last year. Pakistan’s exports are nose-diving, creating a severe balance of payment problem. The shortage of energy is adding insult to injury. Pakistan also needs funds for debt servicing and increase in the oil import bill will have adverse effects on the spending in the social sectors. The country also needs to rid itself of the loss-making public entities which are eating out the hard-earned taxpayers’ money. The economy of Pakistan is facing hostile neighbor and challenging environment in the international market. The finance minister is ready to present annual federal budget this month, and it will require careful policies and prudent allocation of funds to keep the economy stable in the emerging situation.
