From stability to growth

AN age-old question in Pakistan’s economic management is lurking behind the scenes one more time. How do we transition from economic stabilisation to economic growth? There is by now little doubt that stability has finally returned to Pakistan’s economy. But when and how we get to the stage where growth can resume remains the largest question hanging over the economy. It is not difficult to see the return of stability. The inflationary fire has finally been extinguished, as the latest data from November makes clear. The current account has registered three months of surpluses. Foreign exchange reserves have risen from near default levels in June 2023 to nearly enough to cover two and a half months of imports (at current import figures). The fiscal equation is still showing considerable stress, despite the rosy figures uploaded by the finance ministry recently in which 42 per cent of total revenues were accounted for by State Bank profits alone, which helped them post a primary surplus equal to 2.6pc of GDP. Overall, revenue performance has not kept pace with programme projections, which is probably what prompted the ‘unusual’ visit by the mission chief last month. But the statement released after that visit seemed to avoid any hint that the programme had hit snags.