The Pakistani economy showed signs of revival in the year 2019.  

The economic factors which looked shaky in the first half brought about a semblance of stabilisation as Prime Minister Imran Khan’s new economic team got into its stride to make much-needed corrections in the economic framework, including containing ballooning trade deficit, circular debt, and foreign loans, shoring up foreign exchange reserves and easing balance of payment crisis.

The country entered into an agreement with the International Monetary Fund (IMF) this year to stave off a balance of payment crisis and ease increasing current account and fiscal deficits.

Upward inflationary spirals triggered by the stabilisation policies took a heavy toll on the ordinary people who find it hard to scratch a decent living.

However, things began to look up on the fiscal side in the second half with exchange rate stablised and critical deficits cut massively.

IMF in its review in Nov this year said: “The external and fiscal deficits are narrowing, inflation is expected to decline, and growth, although slow, remains positive.”

A global credit rating agency – Moody’s Investor Service – also upgraded the outlook on Pakistan’s debt from negative stable, indicating that strength is returning to the external sector.

Take a look at the major developments on the economic front that made headlines throughout 2019

The new economic team in the saddle

On April 18, PTI MNA Asad Umar quit as finance minister and was replaced by Dr. Abdul Hafeez Shaikh in a major reshuffle in Prime Minister Imran Khan’s cabinet to steer the country out of the worsening economic crisis.

Later, the government brought in Syed Shabbar Zaidi, a prominent chartered accountant and former caretaker provincial minister for Sindh as Federal Board of Revenue (FBR) to replace Jahanzeb Khan.

State Bank of Pakistan (SBP) Governor Tariq Bajwa was also shown the door as Dr Reza Baqir, who was associated with the International Monetary Fund (IMF) as its resident director for Egypt was appointed as his successor.

Pakistan signs up for IMF bailout package

On May 12, Dr Abdul Hafeez Shaikh announced that the technical teams of the government and the International Monetary Fund (IMF) have reached an agreement on a bailout package for Pakistan after lengthy talks spanning five months.

“After months of discussions and negotiations, a staff-level agreement has been reached between Pakistan and the IMF,” he said while speaking on state-run PTV News.

Dr. Shaikh revealed that Pakistan would receive $6 billion worth of assistance under the IMF programme over a period of three years.

PTI govt rolls out first full-year budget

On Jun 11, Minister for Economic Affairs Hammad Azhar, who held the portfolio of State Minister for Revenue at that time, presented the PTI government’s first full-budget in the National Assembly, unrolling a fierce tax plan.

The budget set an ambitious tax collection target of Rs5.555tr for the Federal Board of Revenue (FBR) that failed to achieve its Rs4.435tr target during last fiscal year by a record margin. It also revised the FBR’s collection target to Rs4.15tr.

The minister had predicted the tax-to-GDP ratio will grow to 12.6pc next year from current year’s 12pc.

The budget promised import contraction and an increase in exports to reduce external deficit to $6.5bn next year from $13bn in FY 2018-19.

Dollar rises to all-time high at Rs164 versus rupee

On June 26, the US dollar rose Rs7.6 to a historic high at Rs164 against the rupee in the interbank market.

However, the greenback has been on a consistent downward trend since then as the stablisation measures put in place by the government began to bear fruits. The dollar has shed its value by around Rs10 and stands at Rs155 against the rupee as of Dec 30.

SBP receives 3rd $1 billion tranche

On Jan 23, the State Bank of Pakistan (SBP) received a third and last $1 billion tranche as part of $3 billion balance of payment support from Saudi Arabia.

Last year in Oct, the kingdom pledged a $6 billion bailout package – $3 billion in foreign currency support and another $3 billion in deferred payments on oil imports.

UAE finalises $6.2bn financial package for Pakistan

In Jan, Pakistan and the United Arab Emirates (UAE) finalised the terms and conditions of a support package worth $6.2 billion.

The package entailed $3.2 bn worth of oil supplies on deferred payment along with a $3bn cash deposit.

SBP receives $2.2 billion from China

On March 25, SBP announced to have received 15 billion Renminbi (RMN) – also known as yuan – equivalent to $2.2 billion “as proceeds of the loan obtained by Government of Pakistan from China.”

Trade deficit contracts

On Dec 1,  Commerce Adviser Abdul Razak Dawood shared the latest data on the country’s trade deficit, saying it fell to $9.496 billion from $14.47bn in the same period last fiscal year.

The exports during the period increased by 4.8 per cent to $9.55bn compared to $9.11 during last year’s corresponding period.

Whereas imports – which seems to have been on the downward spiral during the fiscal year – declined by 19.27pc to $19.04bn from $23.59bn last year.

Current account deficit shrinks

Current account deficit declined by 72.6 per cent in November and 73 per cent between July-Nov this year, according to Adviser to the Prime Minister on Finance Dr Abdul Hafeez Shaikh.

Sharing latest figures on external deficit and foreign reserves on Twitter on Dec 20, he said in five months, an increase in State Bank of Pakistan’s reserves by “$1.8B & reduction of $3B in FX swaps/forward liabilities increased FX buffer by $4.8B,” providing further stability to external account.

Moody’s upgrades Pakistan’s ratings outlook

Moody’s Investor Services upgraded Pakistan’s outlook from “negative to stable.”

It had downgraded Pakistan’s ratings outlook to negative last year in June because of higher external vulnerability risk in view of depleting foreign exchange reserves.

Tax filers increase to 1.4m

The number of tax returns filers increased up to 1.4m as compared to last year’s 1.1m in Dec, according to Hammad Azhar, Minister for Economic Affairs.