In the aftermath of generous foreign inflows from multilateral creditors such as release of third IMF tranche and bilateral donor Saudi Arabia, Pakistan’s Finance Minister Ishaq Dar has successfully fulfilled his promise to cross foreign currency reserves a psychological barrier of $10 billion mark on March 31, 2014.
Now the next target of the incumbent regime is to further build up the foreign currency reserves by pouring $4-5 billion more into the kitty of State Bank of Pakistan during this ongoing fourth quarter (April-June) period by ensuring $600 million to $650 million from Etisalat, launching of Eurobond worth $500 million, auction of 3G and 4G technology and restoration of program loans from the World Bank and Asian Development Bank to the tune of $1.5 to $1.7 billion.
With thumping mode, the Finance Ministry had announced last week that the foreign exchange reserves (FER) crossed the threshold of US $10 billion on 31st March 2014.
The total liquid reserves stood at US $10.072 billion. The net reserves with State Bank of Pakistan are US $5.365 billion and the net reserves with the Banks stood at US $4.706 billion.
The PML (N) government, according to Finance Minister Ishaq Dar, had fulfilled yet another commitment with the nation of shoring up of the FER to a comfortable level of US $10 billion by the end of March 2014.
Although, the building up of foreign currency reserves are important for restoring confidence of international community as well as investors about the macroeconomic strength but there are many other areas where the government will have to work hard to sustain these gains in months and years ahead.
Without addressing the core problems being faced by the country in shape of structural weaknesses such as ensuring competitiveness for boosting exports, removing bottlenecks to ensure efficiency, bringing all taxable income into the net by broadening of narrowed base, the country’s difficulties cannot be overcome by improving any single indicator. Pakistan will have to adopt a holistic approach to resolve the lingering macroeconomic issues on permanent basis.
Pakistan’s economic performance since independence had shown mixed results, fluctuating from high growth to bottom growth after every few years. The main reason behind this un-sustained growth trajectory was unwillingness of powerful elites and policy makers to pursue genuine reforms that aimed at removing bottlenecks to run the economy as most important part of improved governance structure.
By looking back to the history, the country had achieved higher growth when it received more foreign inflows after siding with international powers but all gain evaporated with blink of an eye in months after witnessing any shock or it disappeared within one or two years because of inability to cope with non- favourable external position. When inflows of dollar dried up, the economic gains disappeared and this will continue to happen until and unless we strengthen our economy by treating it as top most priority of not only the government but of whole nation to achieve growth and prosperity on long and sustained basis.
