In a reply to Ahsan Iqbail tweet Asad Umar challenged him on Twitter for a live tv debate on economy but the program never happened so Asad today posted his views on social media.
Economic Facts
Last weekend in response to a tweet of mine about the need to fight corruption , ahsan iqbal made two very specific assertions and said these improvements don’t take place under the corrupt.. I replied that those assertions were not correct/misleading and offered to have a tv program to discuss the issues. Unfortunately waited all week but the program could not take place, I assume because ahsan iqbal had other important commitments. So now let me respond here.
First assertion : FX reserves have tripled. Yes they have gone up from SBP reserves of 6 billion$ to 18 billion. In the same period foreign debt has increased from $61 billion to $74 billion. Or in other words the Foreign currency reserves have gone up by $12 billion but in the same period foreign currency debt has gone up by $13 billion. To put it simply , the increase in reserves is the result of increased foreign borrowing NOT improved economic performance. Infact the reserves would have FALLEN if we had not resorted to additional borrowing.
Second assertion : Growth rate has doubled. While the first assertion, as we have seen above, is totally misleading , the second one was unfortunately simply false. The growth rate in the last 3 years of PPP rule averaged 3.7% and the average growth rate in the 3 completed years of this Govt’s rule is 4.26%. A mere half a percent point improvement , rather than the doubling of growth claimed. This is despite the fact that the independent economists have raised serious question marks about the growth rate being reported by the current govt as being exaggerated . Even the official reported growth is only slightly higher than the immediately preceding period.
It should also be noted that Pakistan was hit by two major floods in the last 3 years of PPP rule and the international oil price was above a 100$. Despite no negative weather related shocks and the bonanza of the oil price collapse to less than half its peak , our growth is barely higher. If you look at agriculture which directly effects the lives of two thirds of Pakistani’s, the growth under the PML N govt has averaged 1.6% vs 2.7% in the last 3 years of the previous regime. So growth as it effects the lives of the majority of Pakistani’s has actually been much lower.
Just as an additional point , while Ahsan Iqbal did not mention it, much is made of the strong performance of the stock market. Once again, the facts do not square up with the hoopla. KSE index growth in the first 3 years of this Govt was 80%, while the KSE index growth in the 3 years period immediately preceding this Govt. was actually a far stronger 116%.
Again much is made of improved investor confidence. What do the facts say ? an average investment to GDP ratio of 15.1% vs an average of 14.7% in the preceding 3 years. The needle has barely moved. On the external front the news is grim. Exports continue to fall for the first time in the history of Pakistan and this year will end up almost 5 billion $ vs the last year of the previous regime. Both the absolute trade deficit and the current account deficits this year are expected to be the worst ever in this fiscal year. Economic indicator after economic indicator, we see the stark gap between reality and the claims of the PML N Govt. One thing however, that this Govt. is truly good at , is projection of non existing achievements and creating a hype in the presence of sustained poor performance.
Written by: Asad Umar
Source: https://web.facebook.com/notes/asad-umar/economic-facts/1234323303351042/?_rdr
