Economic Affairs & National Development

2023 began on a dismal note for Pakistan’s economy, as foreign exchange reserves were fast-depleting, remittances and exports were declining, the rupee was depreciating, industrial production was decreasing, and inflation surged – resulting from a confluence of multiple internal and external factors. In the months leading up to June, newspaper and media headlines continued to warn that the country’s economic crisis could soon morph into a sovereign default without a bailout loan from the International Monetary Fund (IMF).
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The saga of Pakistan and the FATF is one that I have written about extensively, having been an ardent contributor and advocate for the strategy that led to the country’s ultimately successful exit from the dreaded gray-list. The crux of that strategy involved a twofold approach: (1) improving financial oversight, legal frameworks, and institutional coordination for the intrinsic benefit to the financial regime, but also (2) calling out the deeply-politicized and corrupt agenda of the FATF as a transboundary body run amok. This dual-approach yielded excellent results for Pakistan, and incidentally, the agent-provocateur of that tussle with the FATF is now up for a similar review.
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The question of our overall trade balance, how much we export and import, is one that has always been of significant concern, and one that has bedeviled many successive administrations, particularly those of recent times. It is generally ideal for a country to have a high level of both exports and imports, with roughly an equal amount of both. If exports are too great, there are negative effects such as strong appreciation of the currency, the need to reinvest surplus forex, and inflation.
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