According to reports issued by Think Tank, despite the apparent short-term control over the current account deficit (CAD), the government’s policies suggest Pakistan’s economy is to stay in the low growth, low export, and close to a default position.
further adding that Foreign aid and purpose advised that the government should slow down foreign borrowing instead of trying to grab every opportunity to procure more foreign loans.
It said the government has controlled the CAD at present but “the respite is precarious and likely short lived”. All indications suggest “the economy would stay in its present state of low growth, low exports, and close to default”, it added.
The IPR report anticipated further devaluation of the rupee or a more restrictive monetary policy and even more increase in administered prices. If all of that happens, the cure may turn out to be worse than the disease, the report said, adding the people of Pakistan were paying a huge cost for years of poor economic management.
The most critical problem faced by Pakistan’s economy is repayment and servicing of external debt and years of ill-advised financial management has brought this stage. In the last ten years, external debt servicing (principal and interest) has ranged between one percent of GDP in FY14 to almost 5pc of GDP in FY20. Remitting such large sums of money overseas without drawing any productive benefit from it, is a loss to the economy.