PR Comments

Photo Source: Dawn

Pakistan Reader# 264, 30 December 2021

Pakistan’s economy in 2021: Major highlights

Despite suffering from structural problems there were moments of cheer

Ankit Singh

Three good things
The year 2021 saw technology-enabled new startups. Around USD 330 million were raised in series of rounds A and B. The startup ecosystem was most disruptive and innovative in the space of e-commerce, health, logistics and finance technology. Even the government has launched the Ehsaas program which is a prequel to the emerging field of micro-finance in Pakistan. Famous startups like Airlift logistics, ‘Bazaar’ and ‘Tazaah’ Technologies were instrumental in bringing the common man and digital technologies to a common platform. 

Roshan digital account (RDA) flows remained robust and provided critical support to the current account deficit. Around USD 3.5 billion have been received in the last 14 months. The investment and deposit were allocated to different assets helping the government to tackle the issue of volatile foreign exchange reserves. The scheme for overseas Pakistani has accumulated around USD 29.4 billion and is expected to reach around USD 31.8 billion by the end of the current financial year in June 2022. The most lucrative aspect of the RDA is the Naya Pakistan Saving Certificate which offers returns on investment of 5-7 per cent per annum in foreign currencies. The domestic middle-class erosion in Pakistan is supported by a new pillar of non-resident Pakistanis who enjoy the chance to divest the money invested anytime, hence the escape and risks are limited to non-resident Pakistanis who were kept in a positive spirit by patriotic appeals from the PM himself. 

Large scale manufacturing was another domain that rebounded after the slump due to the pandemic. Partially motivated to control trade deficit, in which imports exceed the export, the government promoted indigenous manufacturing in the domain of automobile, construction, textile, food, chemicals, non-metallic mineral products and pharmaceutical sectors. Except for the periodical slump in the month of October, the overall year was expansionary in large scale manufacturing. The LSM at 9.73 per cent of GDP dominates the overall manufacturing sector, accounting for 76.1 per centof the sectoral share. It is followed by Small Scale Manufacturing which accounts for 2.12 per cent of GDP and 16.6 per cent sectoral shares.

Overall, Pakistan outpaced its targeted economic growth of 2.1 per cent and the estimated growth now stands at 3.94 per cent helping the economic recovery take a V shape.

Three unfortunate things
The inflation averaged at 8.8 per cent for the financial year 2021 (July-May) and it has gotten worse reaching an all-time high of 11.5 per cent in the month of November 2021. The issue this year stemmed from the borrowing and lending at cheap/free rates to small and medium enterprises, poor farmers with no collateral required with limited revenue space. The net domestic debt has risen to USD 162 billion by this year. Largely the microeconomic factors were pushed by favourable understanding with the International Monetary Fund (IMF) for the continuation of the latest extended fund facility worth USD 6 billion, IMF conditions have led the government to reduce subsidies and expand tax base which is not helping the sentiments of the market in the short term. 

IMF became the neo-imperial lord in Pakistan, the sovereignty of the State Bank of Pakistan has been the latest offering by Pakistan to IMF for maintaining a favourable stance on Pakistan as that opens up the flow of money from other multilateral institutions like ADB, World Bank etc. In addition, the IMF has demanded a target on revenue collection and expects the government to expand the tax base by including new sectors and more urban spaces. The decision to increase valuation rates and recent drive to reclaim occupied public land in Pakistan is also inspired by the discussion with IMF. The energy sector has also been expected by IMF to regulate the circular debt by increasing the price per unit, in recent months there has been a gradual but substantial hike in base power tariff of electricity per unit by reducing the subsidies of around PKR 7 per unit. In its Circular Debt Managing Plan (CDPM), shared with the IMF, World Bank and ADB, average losses of Discos will be reduced by 0.5 per cent each year from 16.32 per cent to 15.70 per cent by 2022-23 whereas recovery will also be improved to 95.98 per cent by 2022-23 which are both uphill tasks. The historic low of PKR against USD was also enabled was another issue which culminated due to the issue of surging trade deficit, rising inflation and negative interest rates when the government ditched the harsh conditions of previous IMF conditions under EFF and instead went for consumption cravings in the May month of this year. 

The gas crises of the winter season have severely impacted the common man living in even far-flung areas from Chaman to Murree. According to Dr Manzoor Ahmad in his opinion in The Express Tribune, “When the global prices of LNG plunged in early 2020, the government had an offer to buy all its requirements for the next three years at $4 per mmbtu, but it let the offer lapse. With the global prices rising sharply, in November 2021, it was forced to buy spot cargoes at over USD 30 per mmbtu.” Therefore, the price of LNG went surging and the government could not afford to buy enough for winters and the CNG supply in the country was hit badly. The refineries were forced to shut down their operations as well as the government imported furnace oil because of which refineries could offload the furnace oil produced in the process. The year 2021 was a year of translucent decisions in terms of economy, Imran Khan who swore never to go to IMF had to resort to the rescue of IMF by August and paid a dear price in terms of the financial burden on masses of the country. 

On a lighter note
Shaukat Bikhari, who has been begging in Multan is said to have earned PKR 1000 per day was finally served notice by the Federal Bureau of Revenue (FBR) after finding out that his children were studying in the city’s elite schools and he had insured his children with life insurance of PKR 10 million. FBR has served a notice to him and demanded an explanation for his source of income.

Ali Ahmed, “Roshan Digital Account: Inflows climb above $2.9bn in November this year,” Business Recorder, 9 December 2021
Startup space 2021,” Business Recorder, 28 December 2021
Afreen Mirza and Khawaja Burhan Uddin, “Startup investment grows by leaps and bounds,” Geo TV, 29 December 2021
Mubarak Zeb Khan, “LSM contracts 1.19pc in October,” Dawn, 17 December 2021
Shahbaz Rana, “Inflation to stay in double digits in Dec,” The Express Tribune, 28 December 2021
Mushtaq Ghumman, “Govt eyes further Rs2/unit hike in base power tariff,” Business Recorder, 23 November 2021
Mohammad Ishaq Dar, “The New SBP Bill: When Central Bank Autonomy Goes So Far That It Challenges State Sovereignty,” The Friday Times, 15 November 2021
Dr Manzoor Ahmed, “Reviewing economy in 2021,” The Express Tribune, 27 December 2021
FBR serves notice to beggar,” Business Recorder, 22 October 2021

Recent PR Comments

Provincial politics, federal-provincial differences and economic woes will dominate the province in 2022

Sindh in 2022: Three issues to look for

Political change, social issues and economic growth are likely to dominate the KP during this year

Khyber Pakhtunkhwa in 2022: Three likely issues

Local government elections, extremism and debate over the South Punjab province are likely to be the most prominent in 2022

Punjab in 2022: Five developments to look for

Political engineering, violence and protest for better governance will dominate the province in 2022

Balochistan in 2022: Three likely issues

Few political changes are taking place. But, a deeper analysis would reveal, the template remains the same

Internal Politics: The more it change…

The release is an attempt to enlighten citizens on the Government’s policy objectives to deal with traditional and non-traditional security threats

National Security Policy of Pakistan (2022-2026): Six Highlights

The  war against America and support of Pakistan for the Taliban has not pacified the tribal Pashtuns in their border claims on the Durand line

Durand Line: A dead horse or a deepest fear for Pakistan

Judicial Commission of Pakistan approving the nomination of Justice Ayesha Malik to the Supreme Court

Justice Ayesha: Breaking the Legal Ceiling

Three hits and three misses

Pakistan's Foreign Policy in 2021

Despite suffering from structural problems there were moments of cheer

Pakistan’s economy in 2021: Major highlights

It was a rollercoaster year for Pakistan. Like the previous year. And the previous years

2021: Where the PTI scored, missed and floundered, and what it means for 2022

The downfall of PTI in the KP local body polls is an indication of its own mistakes. Find out why?

Khyber Pakhtunkhwa LB polls: Shocking yet predicted loss for PTI

Approximately one-tenth of Pakistan's external public debt servicing was paid to the ADB.

Pakistan and the Asian Development Bank

The sense ranges from feebleness of the media to frustration about misaligned coverages of issues

Pakistani media’s response to the Justice Saqib Nisar audio leak| Major takeaways

The state officials must address long-standing student issues because the Student Solidarity March is only the beginning.

Student’s Solidarity March in Pakistan: A step in the right direction

Protests highlights that the unrest among the people of Gwadar is not only going unaddressed, but is also aggravating the situation.

Protests in Gwadar: Four major highlights

Pakistan has agreed to various conditions of IMF for continuation of a loan of USD 4.268 billion only while avoiding further Chinese loans

Mini budget, IMF and a contemporary puzzle.

The fortunes of the Pakistani cricket team in the recent ICC T20 World Cup are mirrored in some intense social media battles

Pakistan cricket: Social media an outlet for inflamed passions

PM Khan appoints Lt. Gen. Nadeem Anjum as DG Inter Services Intelligence (ISI) in consonance with the Army Chief

Impasse over next ISI Chief over after 20 days of cordial silence

The judicial activism balances increasing curbs on digital media in the country. However, it’s a long road ahead

The fragility of Digital Media Freedom in Pakistan

A secret government deal with the TLP refers to releasing those who were arrested, and allowing the party to contest in elections

PTI’s TLP flip-flop and a secret deal

Time tested relationship in shifting sands of geopolitics of Gulf

Post IMF Review: Saudi Arabia to bolster Pakistan

Inflation is not just a number, but rather a multi-dimensional problem. If unattended, might create “a make or break” situation for the PTI

Pakistan’s prolonged Inflation problem

Why would the government accept most of its demands in October 2021?

TLP: The government caves in again

The recurring protests staged by the TLP highlights the fact that the state has failed to address political-religious issues

TLP is back again

In the recent past, several positive measures have been initiated to assist transgender persons; however, Pakistan has a long way to go.

Pakistan’s transgender community: The long road ahead

Another Chief Minister, another no-confidence motion

Political instability in Balochistan

The absence of a telephone call between President Joe Biden and Prime Imran Khan is an expression of the current US-Pak ties

Since January 2021: Why the US President has not called Pakistan’s Prime Minister so far?

The recent spate in honour attacks in Pakistan shows there is no end in sight to the problem.

No honour in honour killing

Achieving full potential in hydropower is an elusive dream given its declining water availability, inadequate infrastructure and finance.

Pakistan's Hydropower Sector: Contribution, Challenges and Prospects

Neither Imran Khan is powerful, nor his party is strong to take on the Establishment

Appointing the new ISI Chief: Why is Imran Khan delaying the notification? Who will blink?

Recent military reshuffle and the possible reasons behind it

The Military Reshuffle: A strategic or routine decision?

Dr Khan may have died a disappointed man on how the State treated him, but he would remain a hero for the nation

Dr AQ Khan: Between a national hero and a nuclear proliferator

The data driven world is tending to Pandora leaks by glossing over the common man’s syndrome of big personalities

Tax avoidance: From Panama papers to Pandora Papers

Poverty, taboos, societal norms, and a weak State response fuel the prevalence of child sexual abuse in the country

Rising child abuse in Pakistan: Five reasons why

The Hazaras in Pakistan have faced endless persecution despite state measures to protect the community

Hazara Persecution in Pakistan: No end in sight

Is the rest of Pakistan ready for the same?

Talking to the Pakistani Taliban: What did Imran say? And what does it mean?

Socio-economic pressures, limitations of healthcare sector, and lack of institutional mechanisms fuel the mental health crisis in Pakistan

Pakistan’s mental health crisis: Of apathy and State failure

Baloch nationalist opinion that the current initiative lacks seriousness

Dialogue with Baloch Insurgents: Will Imran Khan Succeed where others have failed

Four major challenges

Fighting Polio in Pakistan

A case study of TikTok

Social Media Censorship in Pakistan

The political rise and fall of a sugar baron

The curious case of Jahangir Khan Tareen

PR Debate

The Future of PDM: Will the Opposition alliance break up?

Between the government and the opposition, there are no winners

Senate Chairman Elections in Pakistan: Eight Takeaways

A tactical arrangement or a broader political goal?

Ceasefire at LoC: Understanding Pakistan's motivations

Three takeaways on PTI, PDM and the Election Commission

NA 75 Sialkot Daska By-Election

The Federal Government Employees’ demand a 40 per cent hike

Another protest in Islamabad

Why does the government want to change the voting procedure in the Parlaiment?

Pakistan's Senate problem

Will the PPP's no-confidence motion against Imran Khan succeed?

Is the PDM slowing down?

The people want to get rid of the constitutional and political limbo. Five reasons why

Gilgit Baltistan


Pakistan bans three more organizations as proscribed, but the problem remains


Smart Lockdown, SOPs vs Social Realities


Khalilzad meets Gen Bajwa: What is Pakistan’s Afghan Endgame?

After Doha

The US-Taliban deal will lead to an Afghan Civil War

RIP Stephen Cohen

Call me Steve

Election 2018 Analysis -02

The Tehreek-e-Labbaik: Rise of the Radical

Election 2018 Analysis -01

The Naya Pakistan: Five Major Trends


Fighting Taliban and the Islamic State: Don't prioritize


Indo-Pak Dialogue Options: Importance of Back Channel


De-securitizing the Indus


Cross-LoC Interactions: Low Hanging Kashmir Fruit


Honouring Younis and Misbah


Scarcity, Institutions, Securitization: Our “Other” Water Issues


Fighting the Daesh: A Regional Counter IS Strategy


The Husain Huqqani Revelation


Deep-rooted Misogyny: Offend her; she will forgive in the name of tradition


The Standing Passengers of PIA


Tehmina Janjua: Internal Challenges for the New Foreign Secretary


Shahid Afridi: Well Played Hero


Court, Society and Valentine Day: Is expression of love against our culture?


Operationalising the China-Pakistan Economic Corridor


Pakistan’s Afghan Policy: What Shapes? Who Shapes? And through What Strategies?


And Now, They Are Coming For Our Children


The Axact Scam: Demands for Fake Degrees


Pakistan’s Panama Paradox: Demanding Accountability vs Fixing Sharifs