Indicators of Economic Recovery: A Positive Outlook Emerges

Rising from the Ashes: Indicators of Economic Recovery Illuminate a Promising Horizon"

In a resolute effort to secure Pakistan's economic stability, the caretaker government, security forces, and military leadership have initiated a relentless crackdown against money-lundring and illegal business of Dollars and its smuggling,  the overall situation of the economy is now satisfactory to some extent. Efforts to control smuggling have also been successful due to the strict border surveillance system. Due to these measures, the fluctuation in the value of the rupee against the dollar has also been in a positive range. 

In a media report, it has been stated that due to the stabilization of the value of the rupee, a significant reduction of 1675 billion rupees has been seen in the total debt value of Pakistan. Which is the result of the economic strategy of the caretaker government, especially the administrative measures to prevent dollar smuggling and black marketing. The quarterly gross debt data from the State Bank of Pakistan shows that the gross debt of the government has significantly decreased by Rs 1675 billion during September 2023 as compared to August 2023. The value of total loans has decreased by 2.6% due to the stabilization of rupee in one month period. 

 

Pakistan Stock Exchange and the first time in the country's history that the index has crossed the new highest level of 55,000

 

According to the data released by the State Bank, the value of loans in August was estimated at 305.62 rupees to the dollar, while the average value of the dollar in September was 287.78 rupees, which reduced the value of total loans. Although there was a significant reduction in the volume of loans till the end of September compared to August of the current financial year, total loans increased by 1450 billion rupees in the first quarter. If the government of Pakistan reduces its non-developmental expenses, follows strict financial discipline, reduces the amount of black money and brings the rate of smuggling to zero, then the country's economy can be stabilized.

Government follows these measures, the value of the dollar can be brought down below 200 rupees. The economic activities in the country will also be accelerated, the government will also increase, thus Pakistan will be able to pay its debts. However, in another report of the media, it has been stated that the rate of inflation continues to increase in the country. According to the statistics agency, the rate of inflation has increased slightly on a weekly basis, while the rate of inflation on an annual basis has also been 29.86 percent.

In the country, the salaried class is most affected by inflation. Especially whose monthly income is between 25 to 30 thousand rupees. If there is an increase in the prices of vegetables or pulses and flour, ghee, etc., this section is affected the most. If we look at the income of this group, the inflation rate is very high. Conditions are also not favorable for the middle class as they are unable to face the consequences of inflation. The income is limited, so their budget is also disturbed, while the upper class is not much affected because their income is high, due to which they can easily buy daily usage items and their purchasing power does not effected.

Meanwhile, according to a news report, the IMF has demanded Pakistan to make a strict policy to stop money laundering and suspicious transactions under the guise of imports. In order to eliminate money laundering, FBR has also been proposed to increase the capacity of the FBR and strengthen the enforcement system, as well as to make the penalties for suspicious transactions more stringent through the Finance Bill in the upcoming budget. 

According to sources, discussions are going on between FBR, State Bank and IMF on tax collection plan, anti-money laundering and suspicious transactions. In which the FBR has provided complete details of "sales tax, income tax, customs and excise" from each sector. Sources say that there is a possibility of agreeing on the method of tax collection involved in the cases while FBR has also planned to include retailers in the tax net from January.

According to sources, the FBR has assured the IMF of achieving the tax target for the current financial year. While the caretaker government has fully implemented the programme. According to FBR sources, the IMF has called for strict policy on money laundering, suspicious transactions and to prevent money laundering under the guise of imports in tax exempt sectors. The measures of FBR and State Bank have been described as insufficient. Sources say that the IMF has directed the FBR and State Bank to tighten measures to prevent money laundering by December, according to sources. has suggested that FBR and State Bank should formulate a clear policy for tax crimes and suspicious transactions.

If go through the history, the facts will be recognized that the recommendations given by the IMF should be followed by the Government of every developing and poor country. Money laundering is an illegal activity, so foolproof legislation is the need of the hour to curb the illegal activity. Financial resources can be controlled only by closing the backdoors of Pakistan's monetary sector. If Pakistan succeeds in controlling financial and white-collar crimes, the indicators of the country's economy will go towards greater improvement. 

The acceleration in the Pakistan Stock Exchange and the first time in the country's history that the index has crossed the new highest level of 55,000 is the result of these measures. The dollar flight has been limited by the improvement in economic indicators, the daily increase of one rupee and above has started to be limited to a few paise.

Expert says that positive economic indicators are likely to lead to a current account surplus by the end of November, while the release of $600 million from China, $700 million from the IMF, and the completion of the ongoing IMF review, the country's foreign Direct investment is expected to follow, say representatives of exchange companies. Factors such as the refugees going to Afghanistan taking dollars with them instead of rupees and the activation of the gray market, the alleged betting of dollars in the adjacent border cities, are leading to the advance of the dollar.

Pakistan can easily overcome its economic challenges, only the state and administrative mechanisms need to be freed from the backdoors. The constitution of Pakistan, rules and regulations of various government departments, checks and balances of senior government officials. There are many errors, ambiguities and loopholes in the system, if they are eliminated, it is not difficult to improve the economy of the country. Similarly, there is a need to correct the judicial structural system, rules and regulation and the mechanism of powers of Pakistan.