Economy on track

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Despite of witnessing bumps on the political and economic fronts, PTI government has ultimately reached at a point where the economy has been put on track of growth. On the completion of first review of Pakistan’s economic performance, IMF has acknowledged that Pakistan’s reform program is on track and already producing results. Decisive policy implementation has started to address the deep-seated problems of Pakistan’s economy and to reverse its large imbalances, preserving financial stability. The report acknowledges that the business climate has improved, and market confidence is returning. IMF further adds in its assessment that the Government recognizes that structural reforms. The report has confirmed that End-September performance criteria were observed with wide margins. With regard to inflation outlook, IMF has lowered Inflation projection for FY20 to 11.8%, down from 13% earlier on account of this fact that the administrative and energy tariff adjustments are expected to offset the effects from weak domestic demand. Thereafter, inflation is expected to converge to 5-7%.With regard to the external sector, significant improvement has been witnessed. Overall, Current Account Deficit shrunk by almost two-thirds in the first quarter of the current fiscal year as compared to the same period of last year. The report states that transition to a market determined exchange rate has allowed the rupee to find its new equilibrium quickly, thereby, successfully correcting the ‘exchange rate overvaluation’ of the last 5 years. Tax revenue growth was in double-digits even though customs receipts and other external sector related taxes have suffered due to import compression.

As a major development, PSX becomes best performing market as per Bloomberg in last three months. PSX benchmark KSE 100-Index gained around 10,500 point in last three months. The Moody’s Investors Service has upgraded Pakistan’s credit rating outlook to stable from negative. Appreciating remarks by the international bodies are reflection of the fact that Pakistan’s   economy is moving ahead in the right direction.

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