Semester Project

Report Writing Skills

Title: Economic and Political Challenges of Pakistan

Prepared By:
 Syed Muhammad Danish Raza (SP21-BTY-056)
 Sardar Hammad Munir (SP21-BTY-025)
 Kashif Naveed (SP21-BTY-014)
 Khawaja Ahmed Rasool (SP21-BTY-015)
 Muhammad Subhan Ahmed (SP21-BTY-020)

Submitted to:
Sir. Ali Husnain

COMSATS University Islamabad, Abbottabad Campus

Dated: 22/06/2022
TABLE OF CONTENTS

EXECUTIVE SUMMARY........................................................................................................3
INTRODUCTION OF THE STUDY........................................................................................4
Background Information:.......................................................................................................4
Purpose:..................................................................................................................................4
Significance:...........................................................................................................................4
Scope:.....................................................................................................................................4
Limitations:............................................................................................................................4
REVIEW OF RELATED LITERATURE.................................................................................4
METHODS OF THE STUDY...................................................................................................5
RESULTS AND DISCUSSION................................................................................................5
Global Economy:...................................................................................................................5
Pakistan’s Economy:..............................................................................................................5
Political Instability and our economy:...................................................................................5
Pakistan’s Economy in FY2021:............................................................................................6
ECONOMIC INDICATORS IN DIFFERENT FIELDS...........................................................6
POLITICAL CHALLENGES OF PAKISTAN.........................................................................9
Political Crisis of Pakistan (2022)..........................................................................................9
Constitutional Crisis (2022).................................................................................................10
CONCLUSION........................................................................................................................10
RECOMMENDATIONS.........................................................................................................10
REFERENCES.........................................................................................................................11
References................................................................................................................................11

TABLE OF FIGURES
Figure 1 Investment and Saving as % of GDP (%)...............................................................6
Figure 2 BASIC DATA ON AGRICULTURE.........................................................................7
Figure 3 RESERVES AND EXTRACTION OF PRINCIPAL MINERALS............................7
Figure 4 PRICE INDICES BY CONSUMER INCOME GROUP............................................8
EXECUTIVE SUMMARY

Pakistan is the fifth most populated country in the world. It is a nuclear power and possesses
one of the most powerful military forces. It is in incredibly important geostrategic position on
the globe, thus holds foremost importance for global powers. Despite having these traits, it,
over the years, could not come out of economic and political crisis.
This report discusses the challenges faced by economy of Pakistan and discuss important
indicators provided by the government itself. Report highlights the political problems in the
country and links them with unstable economy.
At the end, report provides suggestions regarding how to improve the economy and how to
overcome the political turmoil.
Summarizing, our country has enormous potential. The problem lies in incompetent people
who are running the country and in lack of understanding. Only with the unity and strength
can a country progress as our founder Quaid-e-Azam Muhammad Ali Jinnah (R.A) has given
us the motto:

“Unity, Faith and Discipline”

 SECTION 1

INTRODUCTION OF THE STUDY

Background Information:

The fifth-most populous nation in the world is Pakistan. It has faced political and economic
difficulties ever since gaining its independence in 1947. The public has witnessed both
political and military governments, yet the issues facing the average person have not been
resolved.

Purpose:

The purpose of this study is to explore Pakistan's politics and economics while highlighting
its difficulties. The report also offers remedies for the problems.

Significance:

The study made in this report would highlight the economic and political challenges of
Pakistan and would provide insight of economy and politics of Pakistan.

Scope:

This study includes significant economic statistics for Pakistan as well as research on the
country's political climate.

Limitations:

We are unable to cover the entire economy in one analysis, so we have chosen to focus
exclusively on the most significant statistical data.

SECTION 2

REVIEW OF RELATED LITERATURE

Pakistan's Finance Division releases an economic review each year. Pakistan Economic
Survey is the name of the document.
Political research is also done by for-profit businesses and media organizations. Economic
studies are performed, for instance, by Moody's Corporation.
Different academic institutions have published studies on Pakistan's political and economic
issues as well as their suggested solutions.
 SECTION 3

METHODS OF THE STUDY

Different agencies, provincial departments, and ministries of the Pakistani government have
provided the statistical data for all the sectors. This study therefore benefits from the
Economic Survey of Pakistan (2022).

SECTION 4

RESULTS AND DISCUSSION

Global Economy:

Early in 2020, the COVID-19 pandemic broke out, causing an unparalleled worldwide
tragedy that sparked equally exceptional global responses to protect lives and lower the
danger of death. Despite being unevenly dispersed globally, COVID vaccination efforts in
2021 allowed for the progressive easing of limitations. Early in 2022, the conflict between
Russia and Ukraine increased global commodity prices, sparked inflation, and increased
domestic inflation rates. Global economic prospects were hampered by high inflation, rising
interest rates, persistent supply constraints, and growing unpredictability. (Pakistan's
Economic Survey, 2022)

Pakistan’s Economy:

Pakistan's economy has experienced many "boom-bust" cycles. Such unpredictable growth
cycles are a result of a wide range of economic problems, including declining budgetary
flexibility, exchange rate pressure, expanding current account deficits, inflation, restrictions
in the energy sector, and a lack of an environment that is favorable to the private sector.
The economy bounced back from the pandemic (a 0.94 percent decline in FY2020), but it
kept up its V-shaped recovery in fiscal year 2022, with real GDP growth of 5.97 percent.
(Pakistan's Economic Survey, 2022)

Political Instability and our economy:

Political unrest in the nation has caused a sharp increase in economic instability.
Uncertainty at the individual, corporate, and governmental levels is detrimental to the
economy. By making definite policy statements that inspire confidence among domestic and
foreign investors and business leaders, political stability may help to reduce uncertainty.
Pakistan’s Economy in FY2021:

After the COVID19 breakthrough, fiscal and monetary stimulus measures had a domino
effect on growth, which sparked a rise in private investment. Additionally, a rebound in
external demand and the SBP's liberal monetary policy stance in FY2021, which focused on
the recovery of the construction sector and required house finance goals, have prepared the
foundation for increased growth momentum in FY2022.
Additionally, a growing momentum was observed because of extensive expansion in large-
scale manufacturing (LSM) and increased agricultural output. However, as the volume of
capital and consumer goods imports as well as energy and non-energy imports expanded, the
economy started to show signs of excess demand. (Pakistan's Economic Survey, 2022)

ECONOMIC INDICATORS IN DIFFERENT FIELDS

1. Growth and Investment:

In Fiscal Year 2022, the real GDP growth remained at 5.97%. However, the celebrations
have been restrained by underlying macroeconomic imbalances and accompanying
domestic/international threats. Pakistan's economy rebounded from the pandemic (0.94
percent decline in FY2020) and continued to report a V-shaped economic recovery, which is
stronger than the 5.74 percent recorded the previous year (FY2021).
GDP for FY2022, at current market values, is at Rs 66,950 billion, up 20% from the previous
year (Rs 55,796 billion). It remained at US$383 billion in monetary terms.

Figure 1 Investment and Saving as % of GDP (%)

2. Agriculture:
In FY2022, the agriculture industry expanded by 4.40 percent, above the
target of 3.5 percent and the previous year's 3.48 percent gain. The agriculture sector
outpaced the rest of the economy, rising 6.58 percent in FY2022 vs 5.96 percent the previous
year. The production growth rates for cotton, rice, sugarcane, and maize are expected to be
17.9%, 10.7%, 9.4%, and 19.0%, respectively.

Figure 2 BASIC DATA ON AGRICULTURE

2. Manufacturing and Mining:

Large-Scale Manufacturing (LSM) had a fantastic year, growing by 10.4 percent from July to
March FY2022, compared to 4.2 percent at the same time previous year. In March FY2022,
LSM increased by 26.6 percent, compared to 22.5 percent the previous month.

Figure 3 RESERVES AND EXTRACTION OF PRINCIPAL MINERALS

4. Capital Markets & Corporate Sector:

During the first nine months of the current fiscal year, the performance of the Pakistan stock
market has been boom-and-bust. The benchmark KSE-100 index fell from 47,356 to 44,929
points between July and March of FY2022. Companies raised Rs 121.5 billion by issuing 32
debt securities between July and March FY2022, whereas 102 prior corporate debt securities
worth Rs 749.82 billion remain outstanding.
5. Inflation:

For the period July-May FY2022, CPI inflation was 11.3 percent, compared to 8.8 percent for
the same time previous year. The Sensitive Price Indicator (SPI) rose to 16.7% from 13.5
percent the previous year. In July-May FY2022, the Wholesale Price Index (WPI) was 23.6
percent, up from 8.4 percent the previous year.

Figure 4 PRICE INDICES BY CONSUMER INCOME GROUP

6. Trade and Payment:

Goods exports increased by 27.6% to US$ 26.8 billion in FY2022, while services exports
increased by 18.2% to US$ 5.8 billion. The textile industry accounted for around two-thirds
of the rise. Apart from textiles, rice exports increased in July-April FY2022, owing mostly to
the non-basmati type.

7. Public Debt:

At the end of March 2022, the total public debt was at Rs 44,366 billion. At the end of March
2022, domestic debt stood at Rs 28,076 billion, while external public debt stood at Rs 16,290
billion, or US$ 88.8 billion.

8. Energy:

According to the most recent figures, the oil import cost jumped to US$ 17.03 billion in July-
April FY2022, up from US$8.69 billion in the same period previous year. The total amount
of power generated from coal has now surpassed 5280 MW.
Hydroelectric installed capacity is now 10,251 MW, or around 25% of total installed
capacity.
(Economic Survey of Pakistan, 2022)

POLITICAL CHALLENGES OF PAKISTAN

The last few years represent somewhat of a paradox. Governance has deteriorated, and
corruption has reached new heights. When it comes to appointments, meritocracy is often
neglected. Terrorism and militancy are on the rise. Apart from governance concerns, the
country's general outlook has been severely harmed by political instability. Pakistan is
regarded as one of the most politically unstable countries in the world.
Here are few points that examine Pakistan's political concerns and emphasize key issues:
 No elected Prime Minister has ever served the full 5-year term required by the
Constitution.
 Military rulers have twice suspended Pakistan’s constitution.
 The establishment is regarded as the country's powerhouse. In Pakistan, civil primacy is a
foreign idea.
 Political parties are included in dynasty politics. Families run the parties, and there is no
respect for merit.
 Elections are never acceptable to the parties. Allegations of rigging and other anomalies
plague every election.
 Dynasty politics is dominant in Pakistan.
 For the parties, elections are never acceptable. Every election is marred by allegations of
rigging and other irregularities.
 In Pakistan, the governing elite does not perceive corruption to be an issue. As a result,
corrupt individuals remain a part of governments and bureaucracy.
 Moral principles and ethics are no longer a component of Pakistani politics. Every day,
citizens witness politicians insulting one another.
 Parliamentarians engage in unethical acts such as floor crossing, horse-trading, and
bribery.
 The public has lost faith in government institutions.

Political Crisis of Pakistan (2022)

Recent events in Pakistan's power corridors have thrown the country into instability, and
everything has changed. A motion of no confidence brought down the government of
Pakistan Tehreek-e-Insaaf (headed by former cricketer Imran Khan) in March-April 2022.
On April 3rd, 2022, National Assembly Deputy Speaker Qassim Suri denied a no-confidence
vote against Prime Minister Imran Khan, resulting in a political and constitutional crisis.
After the Supreme Court intervened, Imran Khan was deposed in a vote of no confidence on
April 10th, 2022. On March 27th, Imran Khan announced that Pakistani Ambassador to the
United States Assad Majeed had given him a cypher. Minutes of the ambassador's official
meeting with US Secretary of State Donald Lu have been sent. (2022 Constitutional Crisis of
Pakistan, n.d.)
The cypher was handed to Pakistan's National Security Committee, which described it as
"blatant intervention" in Pakistan's domestic affairs. Khan said that cypher was a threat to his
regime and that it was the basis for his removal.
Imran Khan became Pakistan's 23rd prime minister to fail to finish his tenure after being
removed from office. Pakistan was thrown into anarchy when he was deposed. Thousands of
people rallied in big and regional cities around the country, demanding Khan's return.

Constitutional Crisis (2022)

Khan's removal not only caused political instability, but also a constitutional dilemma. The
problem was brought to the attention of the Supreme Court. Punjab, Pakistan's most populous
province, was the most hit. The constitutional and legislative turmoil in Punjab continues to
this day.

SECTION 5

CONCLUSION

Pakistan's economy is on the verge of collapse following the April 2022 government
transition. During FY2022, all favorable economic indicators are rapidly declining. Pakistan's
stock market is in free fall, currency is weakening, and inflation is gaining strength day by
day because of the unprecedented increase in gasoline costs. Similarly, with the fall of former
Prime Minister Imran Khan and the formation of the current coalition administration,
lowering the political temperature has been increasingly difficult. The present administration
is suffering because of the economic crisis, as well as the PTI's ferocious political
aggressiveness.
Pakistan requires a clear road plan in such a circumstance. A new mandate is urgently
required. A democratically elected administration can address the country's economic
concerns while also ensuring political stability.

SECTION 6

RECOMMENDATIONS

In the light of above-mentioned details, following recommendations are made about

economic and political challenges faced by Pakistan:

 Improving public finances is an immediate and critical need of the time

 Move towards a comprehensive reform is urgently needed if economic stability is to be
restored and confidence of investors is to be revived
 Tax-to-GDP ratio should be raised and improve tax machinery of Pakistan
 A completely transparent budget needs to be prepared, keeping in view the suggestions
of all stakeholders
 Balancing imports and exports to manage the debt and inflation as well
 The strengthening of the current account balance payments is possible by rapid
expansion in exports
 Cost-cutting is key in reducing unnecessary expenditures in public and private sectors
(this strategy proved helpful during the last government’s term 2018-2022)
 A durable political system needs to be established
 Free and fair electoral process should be ensured
 Unbiased investigations in corruption cases should be ensured
 Induction of young generation in parliament and bureaucracy would be intelligent step

SECTION 7

REFERENCES

References

2022 Constitutional Crisis of Pakistan. (n.d.). Retrieved from Wikipedia:

https://en.wikipedia.org/wiki/2022_Pakistani_constitutional_crisis#:~:text=A
%20political%20and%20constitutional%20crisis,foreign%20country's
%20involvement%20in%20the
(2022). Economic Survey of Pakistan. Islamabad: Finance Division of Pakistan.