Despite a widening current account deficit and historic depreciation of the currency, Prime Minister Imran Khan has termed the three years of his government "an economic success story".

Chairing a meeting of the Macro Economic Advisory Group in Islamabad on Friday, Khan said that the government's three years are an economic success story as the government inherited huge circular debt, anti-export policies, unsustainable fiscal conditions, less competitive business environment and lack of incentives for the private sector, reported Radio Pakistan.

He said that despite the worst balance of payments crisis in the history of Pakistan in 2018, economic difficulties due to Covid-19, high commodity prices in the global market and humanitarian crisis in Afghanistan having direct and indirect impact on Pakistan, the growth is still expected to be above 4%, which is a huge achievement.

PM's statements come in stark contrast to the wider economic sentiment that has been impacted by the rupee suffering one of its worst years in 2021, while the current account widened due to a high import bill. Foreign exchange reserves held by the State Bank of Pakistan (SBP) have also decreased to under $18 billion recently.

The widening current account deficit has added to the pressure on Pakistani rupee, which has lost 14% of its value against US dollar since its last high in May 2021.

Pakistan’s trade deficit also touched $25 billion during the first half (July-December) of fiscal year 2021-22 as compared to $12.363 billion in the corresponding period of 2020-21, reported the Pakistan Bureau of Statistics (PBS).

The weakening of rupee has also exacerbated inflation in the country, which clocked in at 12.3% in December 2021, nearly a two-year high. The double-digit inflation rate has also prompted the SBP to jack up the interest rate to 9.75%, up 275bps since September last year.

Meanwhile, the meeting was given a comprehensive overview of the overall economic situation of the country.

The meeting was informed that robust economic stabilisation measures were taken which resulted in high growth compared to all regional countries.

The meeting was told that exports have shown an increase of 25%, tax revenues are at a record high with an increase of 38% and remittances have also increased by 27%.

Moreover, the agriculture sector witnessed record incomes, high profits of Rs950 billion were recorded by industries, boom in IT sector due to government's policies, reduction in monthly circular debt after successful IPP tariff agreements as well.

The story was first published in Business Recorder on January 07, 2022.