Editorial
Prime Minister Shehbaz Sharif recently stated that eliminating terrorism is essential for achieving economic stability in Pakistan. While addressing the ongoing terrorism crisis, he emphasized that military operations have had success, yet the frequency of terrorist attacks and fatalities has notably increased.
Moving forward, strengthening intelligence to prevent attacks is crucial. However, it’s equally important to differentiate between the various terror groups operating within the country and engage politically with those open to dialogue, including previously banned groups that were denied the right to protest.
However, the Prime Minister’s statement challenges his own position and that of Finance Minister Muhammad Aurangzeb, who both claim that economic stability has been reached. These claims are based on a supposed current account surplus and a dramatic drop in inflation. Yet, the current account has slipped into deficit, largely due to a temporary surge in exports driven by external factors such as India’s rice export ban and political unrest in Bangladesh.
Exports continue to rely heavily on the private sector, which previously benefited from fiscal and monetary incentives now largely withdrawn due to the IMF program. Despite a reduction in the discount rate from 22% to 12%, the rate remains higher than regional counterparts like India, limiting the competitiveness of Pakistan’s exporters.
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Credit to the private sector has seen growth, but much of it has been directed toward the stock market, which doesn’t necessarily reflect real economic growth or improvements in the incomes of lower- and middle-income Pakistanis. This is evident from the negative performance of the large-scale manufacturing sector, with production dipping by 3.81% in November 2024.
Although inflation has decreased significantly—from 28.73% to 6.5%—this drop is misleading, as it’s partly due to subsidized electricity rates and essential goods in Utility Stores, which often suffer from supply shortages. Economists argue that inflation is likely still in the double digits, and the loss in real income for a large portion of Pakistan’s workforce, which has led to rising poverty levels, is concerning.
While foreign direct investment (FDI) has increased by 56%, this figure is relatively small in comparison to the massive amounts of FDI flowing into countries like China and India. Even the $25 billion in MOUs signed with friendly countries cannot mask the gap.
In conclusion, while the efforts of the armed forces in combating terrorism are commendable, it’s vital that the nation’s elite, who are significant beneficiaries of tax money, also make temporary sacrifices. This would help reduce the immense burden of borrowing and debt repayments that the Pakistani people currently bear.
