PM Nawaz Sharif's First 100 Days Report Card
Foreign Inflows Jump:
Prime Minister Nawaz Sharif's first 100 days in office have seen a significant increase in foreign capital inflows.
Pakistan has $105.4 million foreign direct investment (FDI) in the first two month of the current fiscal year 2013/14 compared to $52.4 million received during the same month of the previous year, according to a Reuters' report. This is a continuation of the trend from the PPP government's last year in office which saw 76% year-over-year jump to reach nearly $1.5 billion foreign investment in fiscal year 2012-13.
Foreign remittances from Pakistani diaspora also saw a 7% increase to reach $2.64 billion in July-Aug 2013. IN addition, Pakistan reached a deal with IMF for $6.6 billion loan and the first tranche of $500 million was disbursed last week.
Load Shedding Decreases:
Circular debt payment of $5 billion by the government has induced power companies to buy more fuel and better utilize installed generating capacity in the last two months. As a result, the people are experiencing fewer hours of load shedding across the country.
The fundamental issue of the gap between cost of generating electricity and the electricity revenue receipts still remains. However, the Nawaz Sharif government is pushing higher electricity rates and lower fuel cost options to reduce this gap. Meanwhile, the circular debt has piled up again to nearly $1 billion in just the last two months. If this debt continues to mount and the government fails to clear it, the load shedding is likely to significantly increase soon.
Prime Minister Nawaz Sharif's government is trying to start talks with the Taliban militants in an effort to reduce the mounting death toll in terrorist attacks. An all-parties conference in Islamabad has endorsed peace talks with the Pakistani Taliban. The TTP leadership has welcomed the talks offer but it has continued to kill soldiers, policemen and civilians to dictate terms to Pakistan government. This was brought in sharp focus when the Taliban killed a top general in Upper Dir recently. The Taliban appear to be exploiting the perceived weakness being communicated by the government in response to continuing attacks.
Recent data from South Asia Terrorism Portal indicates a decline in overall death rate from terrorism but it also shows that more security personnel are continuing to lose their lives in such attacks.
Structural Problems Remain:
Pakistan imports a lot more than it exports. Exports add up to about $25 billion while imports stand at about $45 billion. Similarly, Pakistani government spends a lot more than it takes in as revenue, leaving a budget gap of 6-7% of GDP. It is forced beg and borrow billions of dollars a year to fill this gap. Fundamental structural issues remain in terms of high current account deficits, widening gap between public revenue and spending, and large subsidies to public sector units including the power sector sapping public treasury. FBR is missing revenue target of Rs 2.5 trillion by Rs. 130 billion, according to an International Monetary Fund (IMF) assessment. Debt is accumulating again in the power sector. Economic growth is barely keeping up with population growth. Creation of new jobs lags growth of new entrants into the work force. National savings rate is only about 10% of GDP which reduces domestic investments needed for the future.
Reviving economic growth is the biggest challenge facing the Sharif administration. It's going to be difficult to revive the economy without structural reforms to increase domestic and attract foreign investments, which in turn requires solving the basic issues of terrorism, energy shortages and tax collection.
Here's a video discussion on the subject and other topics:
First 100 Days of Nawaz Sharif Government; Taliban’s Islam is false Islam; Sumbul case; Sheema Kermani from WBT TV on Vimeo.
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Massive Growth in Electrical Connections in Pakistan
Finance Minister Ishaq Dar's Budget 2013-14 Speech