Analysis of current situation of Government of

Pakistan
Currently, Pakistan’s economy is going through a rough patch. Some economic
parameters are declining while others remain somewhat static. While some politicians
and journalists have started to criticize the last government for this situation and they
have, in turn, defended themselves by putting the entire blame on the prior ones, many
people are concerned about how Pakistan will run in the future and what steps should be
taken to improve this economic misfortune.
Many discussions regarding the decaying situation of Pakistani economy have surfaced
since the devaluation of Pakistani rupee against US dollar in the domestic market. US
dollar has reached all-time high, currently 1 US dollar equals 161 Pakistani rupees. The
outcome of the devaluation of Pakistani rupee against US dollar in the domestic market
incidentally coincided with a rise in the crude oil prices in the global market resulting in
an upward trend in oil prices. The trend caused an increase in the manufacturing and
transportation cost resulting in price hike of all the commodities produced locally.
Currency devaluation has further hypothesized that the country might need support from
the IMF (International Monetary Fund). A renowned Pakistani economist claimed that
level of Pakistan’s external debt is expected to rise from $96 billion in 2017-18 to $120
billion by 2020-21 which is currently $103 billion in 2019.
Similarly, unemployment and poverty will also increase in the years to come.
Unemployment rate has already jumped from 6.3% in 2017-2018 to as much as 7.2% in
ongoing fiscal year 2018-19. Consequently, Pakistan’s inflation is expected to remain
high till fiscal year 2020.
With its domestic industry in ruins, Pakistan has not been able to rely on consistent
foreign investment for more than short-run measures. It did recently receive $2 billion
from the United Arab Emirates (UAE) through the Abu Dhabi Fund for Development
(ADFD), which provides concessionary development loans. In February, the Crown
Prince of Saudi Arabia, Mohammad bin Salman, signed seven Memorandums of
Understanding with Pakistan, pledging up to $21 billion worth of investment over the
next six years. If Pakistan is to tackle its current account deficit in the long run, the
government must take substantial steps to improve the macroeconomic conditions of the
country and modernize its industrial sector to become more competitive in international
markets.
To make a significant impact on the current account shortfall, Pakistan needs to ensure an
investment-friendly environment that attracts more foreign direct investment, instead of
relying so heavily on foreign aid. Pakistan currently ranks 136th out of 190 economies. To
improve this ranking and draw more investment, Pakistan should ease customs laws and
regulations, improve the security of the country, and boost its international image as a
desirable destination for tourism and industry. Pakistan also needs to focus on building its
domestic industry to expand its export listing and enhance its competitiveness in the
international markets. Moreover, since its exports currently lose out to low-priced, good-
quality products from countries like China, Pakistan needs to modernize its industrial
sector by establishing new plants and equipment to enhance global integration.
Pakistan’s economic crisis cannot be resolved overnight. Promoting manufacturing by
creating a more investment-friendly environment, broadening its tax base, and
encouraging innovation and modernization in export-led industries are just some of the
most urgent measures the government can take to address the growing fiscal and current
account deficit.