KARACHI: Independent economic organization, AKD Securities has termed the first seven months of the incumbent government as better than the previous two governments, ARY News reported on Wednesday.
A reliable name of the national stock market, AKD Securities Ltd in a report said the rate of interest in the Pakistan Peoples Party (PPP)’s tenure was 13 percent, in the Pakistan Muslim League-Nawaz (PML-N)’s tenure was 10 percent, while currently it is closer to what was in the PML-N’s tenure.
The rate of inflation in the PPP government was 22 percent, in the PML-N government was 8 percent, while presently it stands at 7 percent.
“The PTI’s performance contrasts favorably with both its predecessors the PML-N and the PPP, yet faces the unique situation of relentless criticism,” said the report.
“Encouraging consumption via external funding while keeping the PKR artificially overvalued was always a recipe for disaster and that is exactly what transpired in Pakistan. The country’s REER peaked at 126 in May’17 while develop-ment spending failed to account for expenditure overruns with the country registering FY18 primary and fiscal deficits at 2.2% and 6.6% of GDP, respectively.
“Artificially maintaining the exchange rate resulted in monumental trade (9.9% of GDP) and CA (6.05% of GDP) deficits, con-trasting unfavorably with PML-N inherited figures of CAD at 1.1% and trade deficit at 6.6% of GDP in FY13,” said the report.
The report added: “Better sense in the latter part of PML-N tenure as well as subsequent governments (Caretaker; PTI) resulted in devaluation of PKR, bringing it close to equilibrium. At the same time, with a view to contain primary deficit and sapping demand pressures, the SBP has already raised interest rates by a cumulative 500bps since January 2018.
“Pressures on the external front have been allayed via diplomatic success with friendly countries – Saudi Arabia and UAE have provided cumulative US$5bn thus far with a further US$1bn expected this month while China has provided US$4.2 (BOP support + GoP loan). Simultaneously, Pakistan has kept itself engaged with the IMF where we believe an agreement to this end will likely be reached before Budget 2020.”
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