Dr. Salman Shah is known for the positive sentiment mongering throughout his carrier. His view that Pakistan’s Economy is out of tipping-point and reached take-off points was reviewed by the editorial function of Inside Financial Market (IFM) more eloquently and in detail. As a result, the IFM Editorial Board observed and found the state of affairs to be a tricky and needed a fine balance to determine as to whether Dr. Salman’s following forecasts about the Economy and Market were plausible:
- Pakistan could observe 7% GDP Growth in 2023
- Expectation for execution of 15-20 billion-dollar contracts with China
- 4-5 billion-dollar GDRs are on the cards in 2023-2024
- Stock Market could become Word’s best performing market in the near future
- Payment horizon for Pakistan’s Debt shall be elongated to 15 years from 5 years
There is a consensus amongst economic experts that Debt is neither bad nor and issue when utilized towards financing the growth, and the real-challenge of an economy is to raise the debt and not utilize it towards deficit financing.
Pakistan is a state which has seldom utilized the external debt towards Development Project and of 70% of external debt has been utilized towards the majestic lifestyle of bureaucracy, and ruling elite. Globally, the States are in the practice of offering debt at a near-zero rate with an outright expectation from businesses to create employment. Pakistan’s Debt Model creates a crowding out effect and sucks liquidity. Pakistan’s sovereign-debt model entices wealth to go to State-Treasury which lands country’s 50% young population in an awful state where the State of Pakistan is neither creating nor is seen to be allowing businesses to creating employment. Hence, an Ordinary man on the street questions the seeking of external loans and demands that external loan be only sought for Development Projects which in turn leads to infrastructure development and job creation.
A holistic review and critical examination of Dr. Salman’s commentary about economic affairs reveals that present government is taking structural measures which may not benefit this government, but the result of these measures would benefit the whosoever government which is in power down the road next 2-5 years.
For example, what this government has done in the auto and mobile-phone-sector is something that would flinch bearing fruits for the government down the road 2-3 years. Placing duty on mobile-phones, and cars and denying financing of imported cars by banks are simple things which could have been done the former farmers at the helm as well.
The IMF has released a report at the time of approval of the 6th review. This report predominantly focuses over the challenges which are faced by the Pakistan’s Economy. The Government’s lending of an ear over IMF proposal to have a rightsized GST which was impacting the exports is a good omen. Whereas IMF’s view that Pakistan’s economy would at-least observe 4% growth is also something that makes Dr. Salman’s view about 7% GDP growth in 2023 seems plausible, China had not announced the fast-paced-execution of CPEC-phase-II and had also not committed 15-billion-dollar loan for six industries.