fter witnessing a severe spell of financial hardships and multiple challenges on the external and internal fronts, Pakistan is now beginning to show some encouraging indications of microeconomic stability. Inflation, which had been a major concern, has dropped to a single digit.
The policy rate, previously set at 22 percent, now stands at 17.5 percent. The reduction is aimed at inducing growth and stabilising the financial system. Economic managers of the present government have also been working relentlessly on improving foreign reserves, eliciting confidence in the country’s ability to meet future obligations.
Despite achieving a number of positive microeconomic stability indicators in recent months, Pakistan still faces several diplomatic challenges. Improving relationships with important bilateral partners, like the Gulf countries, China and the United States, is critical for driving foreign investment and improving bilateral trade. Additionally, managing the complex relationships with neighbouring countries, particularly Afghanistan and India, remains a concern.
While economic indicators are showing some improvement, for fiscal stability and a long-term sustainable growth, we still need to work very hard for domestic recovery and improvements in international relations to boost foreign direct investments for promoting bilateral trade through transfer of technology to produce exportable goods of international standard.
These are two key areas to ensure sustained stability and growth. However, the most critical area is the energy crisis. Without having affordable energy, we can neither revive the local industry nor produce competitive exportable goods.
On July 12, Pakistan reached a staff-level agreement (SLA) with the International Monetary Fund for a 37-month extended fund facility (EFF) programme of about $7 billion. This agreement marked a significant milestone as, compared to previous IMF programmes, the process was quite smooth. Unlike in the past, the government and the IMF reached a broad consensus in a relatively short time. However, the agreement carried a necessary condition of final approval of the........