Daily Times

The economy of Pakistan is recovering and demonstrating newfound stability and optimism, bolstered by the improvement of major economic indicators in FY24. After several years of economic uncertainty, the government’s measures have brought about a significant turnaround, positioning the country for a brighter economic future. One of the most notable improvements is seen in the debt-to-GDP ratio, which has fallen from 77% in FY22 to 70% in FY24, marking a six-year low. This decline reflects the government’s success in managing public finances despite global economic headwinds. Similarly, the external debt-to-GDP ratio has decreased from 31% in FY22 to 26% in FY24, signaling reduced dependence on foreign loans and an enhancement in Pakistan’s ability to withstand external shocks. These improvements are part of a larger pattern that also includes a sharp decline in the current account deficit, which fell from $13.8 billion in FY22 to just $0.5 billion in FY24. This decline is indicative of economic stabilisation and a more stable position for the balance of payments.

The country’s trade dynamics also reflect a stronger economic footing. Pakistan’s exports increased from $26.8 billion in FY22 to $30.645 billion in FY24, despite global economic challenges. Imports, on the other hand, fell from $58.9 billion to $54.734 billion during the same period, which led to a significant reduction in the trade deficit from $32.1 billion in FY22 to $24.089 billion in FY24. These figures highlight a more balanced trade environment, driven by improved competitiveness in exports and strategic reductions in non-essential imports. The agricultural sector, which forms the backbone of Pakistan’s economy, has shown robust growth, with an increase in the sector’s growth rate from 4.40% in FY22 to 6.25% in FY24. A 26% rise in agricultural loans, totalling Rs 1,972.8 billion, has aided in this expansion by allowing farmers to purchase higher-quality seeds and cutting-edge equipment. Sales of tractors increased by 47% to 45,494 units, which is in line with the government’s efforts to raise agricultural production. The expansion of important crops including wheat, rice, and cotton highlights the agricultural sector’s comeback as a major economic engine.

Pakistan’s fiscal management has seen significant improvements, particularly in tax collection. The Federal Board of Revenue (FBR) collected Rs 4,855.8 billion in FY22, which rose sharply to Rs 9,306 billion by FY24, nearly doubling the country’s revenue. This increase in tax collection has been pivotal in funding critical government initiatives and infrastructure projects. At the same time, remittances have grown from $26.1 billion in FY22 to $28.9 billion in FY24, providing a steady stream of foreign currency inflows that have bolstered Pakistan’s foreign exchange reserves. These reserves increased from $10.9 billion in FY22 to $14.7 billion in FY24, contributing to economic stability and financial security. Foreign Direct Investment (FDI) also saw an uptick, rising from $1.25 billion in FY22 to $1.729 billion in FY24, signaling growing confidence among international investors in Pakistan’s economic potential. The stock market, too, has responded positively to these developments, with the KSE-100 Index climbing from 44,929 points in FY22 to 80,672 points in FY24, reflecting heightened investor optimism and robust market performance.

In tandem with these improvements, the government has implemented several policies to enhance the living standards of ordinary Pakistanis. The minimum wage has been raised by 15%, bringing it to Rs 37,000, which has directly benefited low-income families. Social safety net programs, such as the Benazir Income Support Program (BISP), continue to provide vital assistance to 9.3 million families, ensuring that the country’s economic gains are more equitably shared. The Prime Minister Youth Business and Agriculture Loan Scheme disbursed Rs 83.683 billion to promote entrepreneurship and boost agricultural productivity, further enhancing opportunities for Pakistan’s youth and farmers. In the energy sector, the government took steps to reduce the cost of living by cutting petrol prices by Rs 70 per liter and diesel prices by Rs 63 per liter, a move that has alleviated pressure on households and businesses alike. The government’s efforts to renegotiate contracts with independent power producers have aimed at reducing unsustainable electricity tariffs, contributing to a more favorable environment for businesses and consumers.

As Pakistan continues to navigate its economic recovery, positive indicators such as a decrease in inflation from 11.1% in July 2024 to 9.6% in August 2024, the lowest rate since October 2021, further enhance the country’s economic outlook. Pakistan has successfully met the conditions of the International Monetary Fund (IMF), with the executive board scheduled to discuss a $7 billion loan package on September 25, 2024. This step, along with a stable dollar and favorable interest rate cuts of 200 basis points by the State Bank of Pakistan (SBP), reinforces the growing stability of the economy. Fuel price reductions and the inflow of remittances, expected to exceed $28 billion in the current financial year, have bolstered investor confidence. The government’s successful management of the economy has helped avert the threat of default, which loomed large during earlier periods of political instability. Pakistan’s economic turnaround, driven by sound policy measures, regional linkages, and international support, is creating a positive sentiment among the public and investors alike. As the country looks toward the future, the positive economic indicators of FY24 signal a promising era of growth, stability, and opportunity for Pakistan.

The author is an independent researcher who writes on issues concerning national and regional security, focusing on matters having critical impact in these milieus. She can be reached at omayaimen333@gmail.com