Web Desk (By, Majid Siddiqui): Business and economy of the state has faced a severe setback during first 100 days of the Pakistan Tehreek-e-Insaf (PTI) government and the major reason of the deteriorating economy is the skyrocketing increase of Rs13 in the value of US dollar.
Pakistan Rupee Against Dollar
First 100 days of PTI government has proved not to be a good omen for Pakistani currency as it has witnessed a surprising fluctuation in value of US Dollar against Pakistan Rupee that hiked about Rs13 in the first hundred days of PM Imran Khan’s new government.
On October 09, 2018, Local currency began to depreciate against dollar and reached at the nerve-racking level of Rs. 138 after an increase of Rs.10.28 in interbank market and Rs. 11.20 in open markets.
On an instance, dollar recorded shocking rise, increasing by 7.5 percent which was the second largest appreciation in last 27 years in one session following the Naya Pakistan government’s inevitable decision to seek new loans from International Monetary Fund (IMF) to support of balance of payment position.Following this sharp increase in the dollar value, in a short span, an increase of 8.20 pc is being recorded in the value of dollar against rupee. The slide recorded during October, was the second biggest slide in single session, first was witnessed in 1999 on May 19, when the rupee depicted a slide of 10 percent.
The experts are of the view that in PM Imran Khan led government, rupee has seen an abysmal downfall which has surged debts up to Rs. 975 billion.
Inflation rate in the country came in at 8.5 percent in the first 100 days of Pakistan Tehreek e Insaf government.
Inflation is general rise in price level of commodities. It is a measure which shows change in price from a certain point in a specific time period. It also shows decrease in purchasing power of a set of people using certain currency.The inflation was reported to be 5.84% on August 18th, 2018.
While on November 25th, 2018 it was 6.8%. It shows that purchasing power of Pakistani nation went down and prices of products went up. If you take a look at sensitive price index of Pakistan bureau of statistics it gives you detailed insight in set of products.
PTI government only relied on the foreign aids and failed to give an effective economic policy for the country, suggested analysts.
During the first 100 days of PTI government the remittances decreased to $2bn and Rs325bn development budget cut during these initial days, which affected badly the ongoing projects of the government.
The trade deficit also increased, the imports increased to $4.72bn and exports decreased to $2.06bn.
Trade deficit is balance created when imports of a country exceed exports of that country.. The trade deficit was USD 2.9 Billion on August 18th, 2018. While on November 25th, 2018 it was USD 2.93 Billion.The rise is very marginal in 100 Days but this is after introducing regulatory duties on imports and devaluation of currency. If the currency would have been at same level it could reduce to a significant extent.
Gas, Electricity Patrol Prices:
The rate of gas and electricity also increased during these 100 days of PTI, and the subsidy of Rs146bn removed on electricity.
The circular debt of power sector also not decreased, and the rate of gas also increased by 140 pc.The petroleum products also increased by 7 rupees, duty on imported items also increased.
During the first three months the budget deficit reached to 11.77
tr rupees, while 1.26tr rupees revenue generated from July to Sep, the expanses were Rs16.43tr, while interest on the loan was 5tr rupees.PTI government failed to change the Federal Bureau of Revenue (FBR) system, and FBR failed to meet their tax targets and Rs80bn less tax collected during the trimester.
Decline in Pakistan Stock Exchange:
Pakistan Stock exchange provides one of most liquid investment forum for foreign investors. The KSE-100 index was at 42,446 on August 18th, 2018. While closing for week of November 25th, 2018 was at 40,869.
Data from fund managers and brokers at Pakistan Stock Exchange shows that there was a major outflow of foreign investors fund over past few months which is still going on.Total value of shares
Total value of shares in market is amount shares will fetch if they are sold at that time.Technically it is referred as market capitalization. The PSX was valued PKR 8,703 billion on August 18th, 2018.
While closing for week of November 25th, 2018 its capitalization was at PKR 8,096 billion. So market capitalization went down in last 100 days.
Pakistan’s Foreign Reserves:
Every country keeps foreign reserves so that it can trade from all countries and make them payments. Pakistan’s foreign reserves stood at USD 16.72 Billions on August 18th, 2018. While on November 25th, 2018 they were standing at USD 14.7 Billions.Analysts expect foreign exchange to dip further by the end of the week as month ends. The dip in foreign exchange was due to external payments and slow down in the arrival of foreign inflows.
Continuous decline in foreign exchange reserves led to devaluation of Pakistan rupee. The country need financial assistance especially from International Monetary Fund to meet the funding gap of $12 billion require during the current fiscal year.
Interest rate is cost of borrowed principal amount from any institution or individual. If the interest rate is high then less people and business will borrow money and economic activities decrease.When interest rate are low the more people and businesses will borrow money and economic activities will increase.. The interest rate was 7.5% on August 18th, 2018. While on November 25th, 2018 it was at 8.5%.
Current Account Deficit
Current account is measure of country’s trade where value of goods and services it imports exceeds the value of goods and services it exports. It also includes net income, interest earned and dividends, money transfers such as foreign aids and grants. It also includes any foreign direct investments made in capital account. . The current account deficit was USD 590 Million on August 18th, 2018. While in October it was USD 950 million. It has widened despite of numerous steps taken by government.
Over All Economic Situation:
Currently major economic indicators are not reflecting progress towards promises made in political campaign, manifesto and 100 Day agenda of Pakistan Tehreek Insaf.The promised economic turnaround will not only lift living standard of people, it will also restore Pakistan’s flight from being emerging markets to developed country.It will provide jobs to majority of unemployed youth. It will lift millions out of poverty. It is audacity of hope which kept this nation afloat throughout history. But time will tell is the nation in right hands or still it has to go the distance to find right leaders. Because in these 100 days nation was not given what was promised.