Capital suggestion - Dr Farrukh Saleem - Sunday, March 13, 2011

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In February 2010, our exports amounted to $1.52 billion. For the period July-February 2009-2010, foreign remittances landing on Pakistani shores sent in by Pakistanis working abroad amounted to $5.7 billion. In February 2010, the rate of inflation stood at 13.04 percent.

I’ve got some good news. Can’t wait to tell you: In February 2011, our exports amounted to $2.16 billion; a hefty increase of 42 percent over the same period last year. For the period July-February 2010-2011, foreign remittances landing on Pakistani shores sent in by Pakistanis working abroad amounted to $6.9 billion; an increase of more than 20 percent over the same period last year. In February 2011, the rate of inflation dipped marginally to a tad under 13 percent.

Surprisingly, for the first time in eight years, during the first half of the current fiscal year, our current account actually posted a surplus of $26 million compared to a deficit of $2.57 billion last year. To top all the good news is the news on foreign exchange reserves – from $11.4 billion to $17.5 billion over the past three years, a wholesome jump of over 50 percent.

According to BMA Capital, a leading securities firm, “Pakistan economy has come across two major setbacks in a short span of last three years – the commodity price boom of 2008 and flash floods of 2010” and yet “Pakistan economy posted strong rebound and achieved 4.1 percent real GDP growth in FY10 from its historical low growth of 1.2% recorded in the preceding year.” Furthermore, the “rupee marked a meagre 1.6 percent depreciation against the greenback and there was a 28 percent gain in KSE100.”

To be certain, exports are up sharply, remittances are on the rise, the current account went through a small – but a meaningful – surplus and inflation is trending downward. The bad news, in the meanwhile, remains that our politicians have failed to reach a political consensus on economic reforms without which the economy shall remain range-bound. While ninety percent of our leaders continue building bridges where there’s no river, they give the other ten percent a bad name.

On the debt front, there’s bad news and not-so-bad news. The bad news is that our domestic debt is rising like never before – up an alarming 70 percent over the past three years. The not-so-bad news is that Rs1.5 trillion worth of new debt raised has actually gone into paying off subsidies given and deferred expenditures incurred during Musharraf’s last year.

The biggest of all bad news remains the Rs1, 000,000,000,000 fiscal deficit (the gap between government expenses and revenues). The government has already slashed the development expenditure by more than 50 percent to plug the gap – and now there’s nothing left to be cut.

As always, good news in this Land of the Pure crawls on its belly. And, nothing travels faster than the speed of light with the sole exception of bad news, which obeys laws of its own. For most Pakistanis no news is good news but for our TV channels good news is not news.

The writer is a columnist based in Islamabad. Email:

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