Pakistan economic growth to remain fragile.

• Author: Kazmi, Shabbir

Byline: Shabbir Kazmi

Pakistan continues to suffer from 'confidence deficit', mainly because of poor economic indicators. Over the last one year, the level has gone down further because of the disparity because the officially released data and the ground realities. The miseries are multiplied due to the failure of economic analyst to link Pakistan's economy with the regional and global landscape, particularly geopolitics. I have no reason to doubt that the situation has not improved, but the quantum is too low and the pace is dismal. As the first quarter will be over in a few days, the efforts should be aimed at developing strategies for the next quarter to achieve better results.

I am inclined to refer to the latest review of Pakistan's economy by the lender of last resort. The International Monetary Fund (IMF) in its declaration released on Friday has stated that Pakistan's economic growth rate is projected at 2.4% during the current financial year (FY20). The delegation of the Fund led by Ernesto Ramirez Rigo recently visited Pakistan and a declaration was released reviewing economic developments, after the commencement of Extended Fund Facility (EFF).

Rigo along with his delegation met top government officials during the visit and discussed progress in the implementation of economic policies. The statement said that while the authorities believe economic reform program is still in its early stages, there has been progress in some key areas. The transition to a market-determined exchange rate has started to deliver positive results on the external balance, exchange rate volatility has diminished, monetary policy is helping to control inflation, and the SBP has improved its foreign exchange buffers.

There has been a significant improvement in tax revenue collections, with taxes showing double-digit growth. Moreover, the FBR is undertaking significant steps to improve tax administration and its interface with taxpayers. Staff and the authorities have analyzed the worse than expected fiscal results of 2018-19, which were partially the result of one-off factors and should not jeopardize the ambitious fiscal targets for 2019-20. Importantly, the social spending measures in the program have been implemented.

To understand global outlook, referring to the recent warning of Christine Lagarde, former head of IMF could provide some perspective. Without mincing words, she warned, global growth looks fragile and under threat and policymakers should...