Although it is still too soon to make a firm claim, a number of signs point to the possibility that Pakistan's economy has already overcome the worst of its recent difficulties.
There were grave worries that the rupee might continue to collapse in value as a result of the IMF's drive for loosen import restrictions and allowing the exchange rate to float. However, the rupee is recovering after falling to a record low of Rs 335 on September 5, stabilizing at about Rs292 to the US dollar, a level that the caretakers inherited.
Around $13 billion in foreign exchange reserves, including $5.5 billion held by commercial banks. Despite a noticeable increase in fuel costs, the inflation rate has decreased and is currently at 27.4%.
Caretaker federal ministers have a difficult task ahead of them as they take over their various ministries. The most recent participant, the federal minister for privatization, correctly draws attention to Pakistan International Airlines (PIA) and Pakistan Steel Mills (PSM), two failing state-owned businesses that have repeatedly suffered significant losses with little improvement.
Although being still in business, PIA claims monthly losses of Rs 13 billion, while PSM, which has been shut down since 2015, nevertheless pays salaries to about 3,100 workers. Although the longevity of the most recent financial assistance for PIA raises concerns about whether it is aligned with the interests of taxpayers, the intensity of the search for a solution is a commendable endeavor.
The public's fury over the astronomical electricity bills that were received in August has been a problem for the minister of power. He has knowledge of the steps that must be taken to increase energy sector efficiency because he served as chair of the power sector investigation committee in 2019.While admirable efforts are being undertaken to enforce anti-theft regulations for gas and electricity, it is as important to put some of the routine suggestions mentioned in the committee's report into practice. Interestingly, the government is allegedly considering going in the opposite direction by choosing bureaucrats as chief executive officers to manage various power businesses, despite the commissions' recommendation for expertise-driven leadership in the power ministry.
The minister of business and industries is actively pursuing ambitious goals, such as a rise of more than 35% in exports in the near future. Several governments have set ambitious export goals over the years without making any significant adjustments.
As a result, those goals are still on paper, and during the past 15 years, exports have scarcely increased. On the other hand, Pakistan's market share has been dropping by roughly 1.45% per year.
Also, as the majority of non-textile sectors were comfortable with selling on the home-protected market, no attention was paid to diversifying the export basket.
Giving subsidies is not viable given the current economic climate and IMF-imposed restrictions. There are still worries that the administration would take a populist tack by requesting higher import duties to placate the influential groups. This action would severely undermine any attempts to stop smuggling and move the economy into the formal sector.
In a broader sense, the caretaker administration's main priority is to make it easier to attract the expected $30 to $50 billion in foreign investment over the following three to four years.The former administration expressed hope that this investment will greatly increase productivity and convert arid areas into fertile farmland. There is excitement about Pakistan's ability to become self-sufficient in food production, saving roughly $10 billion in foreign currency and tripling the country's existing food exports from $5 billion to $10 billion.