We missed all our targets but that isn’t as bad as it sounds. The tone of this year’s Economic Survey of Pakistan – which presents the state of the economy at the conclusion of each fiscal year. Not to cut the government any undeserved slack, but there does seem to be merit in the case. Barring a lunatic fringe, no one can blame the government for the devastating floods of the first quarter of the outgoing fiscal. Or the major fluctuations in the price of oil in the international markets. Moreover, the security situation, a serious problem since 2001, has contributed, like every year, to the slowing down of the pace of economic growth.
Though households across the country might be feeling the pinch, the inflation situation could have actually been worse. Food inflation, which has been the primary driver of inflation since a decade, was bound to be high, especially considering the fact that the floods completely disrupted the crop cycles. Yet, the downward pressures of – counter-intuitively – certain food prices provided a measure of balance. More on the inflation front: even though the government has outspent its fiscal deficit target, there has been an increased discipline as far as borrowing from the central bank has been concerned. This, coupled with the maintenance of a suitably high discount rate by SBP, has sucked excessive liquidity of the money markets, curbing inflation.
Unless some junior bureaucrat whose job it was to check the copy of the Survey report was slacking on the job and forgot to update it, it seems the government is indeed going to try to go for an RGST regime today when it announces the budget. It is about time. That, and the restructuring and privatisation of public sector enterprises, moving from the one-size-fits-all-subsidies to targeted ones like the BISP, better debt management and power sector reforms etc would make it reasonable to assume that the reader would find something to be cheerful about in this very space a year from now.