Inflation is a chronic economic challenge encountered by nations worldwide including Pakistan. While moderate inflation is a normal facet of a robust economy, excessive or hyperinflation can have grave repercussions on the purchasing power of citizens, precipitating economic instability.
There are several underlying factors contributing to the elevated inflation rates in Pakistan. One of the principal instigators of inflation in Pakistan lies in the monetary policy dictated by the nation’s central bank, the State Bank of Pakistan (SBP). When the SBP embarks on expansionary monetary policies, such as reducing interest rates or augmenting the money supply, it can trigger an upsurge in the currency circulating within the economy. This heightened currency circulation can elevate the demand for goods and services, resulting in price escalations.
Fiscal policies instituted by the government can also wield a substantial influence on inflation. Elevated budget deficits and heightened government borrowing can give rise to amplified public spending. This augmented demand for goods and services can exert upward pressure on prices, consequently leading to inflation. The exchange rate between the Pakistani Rupee and foreign currencies impacts inflation. A depreciating rupee elevates import costs, thereby contributing to inflation. Given Pakistan’s reliance on imported commodities, spanning energy, machinery, and raw materials, it is susceptible to currency fluctuations.
Disruptions in the supply chain, be it due to natural calamities, political instability, or logistical issues, can perturb the availability and cost of goods. Such disruptions can engender supply shortages, resulting in elevated prices for essential goods. Pakistan’s economy places a high premium on energy resources, and fluctuations in energy prices, especially oil, possess a direct influence on production and transportation costs. An increase in energy prices can catalyze price hikes across various goods and services.
Pakistan stands as a net importer of numerous commodities, including food, petroleum, and metals. Shifts in global commodity prices, driven by international market dynamics, can directly sway the cost of imported goods, thereby propelling domestic inflation. The rapid population growth in Pakistan represents a distinctive challenge. The nation’s capacity to generate jobs and resources to accommodate this burgeoning population is limited, contributing to underemployment and poverty. The population pressure can incite greater demand for goods and services, resulting in price surges.
Structural shortcomings within the economy, such as inadequate infrastructure, inefficient production processes, and low agricultural productivity, impede the supply side of the economy. When the supply fails to keep pace with escalating demand, it culminates in price hikes and inflation. Pakistan’s vulnerability to external shocks, spanning natural calamities, political strife, and geopolitical events, can disrupt economic activities and contribute to inflation. These occurrences can impact agricultural production, energy supplies, and overall economic stability.
It is on record that the economic situation has been so poor during previous political governments that it was said that Pakistan is going to default. Lately, Pakistan has witnessed notable developments in its economic sector, delivering a welcome relief to individuals grappling with inflation. The government’s recent announcement of substantial reductions in petroleum product prices has been met with enthusiasm. According to the official notification from the Ministry of Finance, the cost of petrol per litre has undergone a significant decrease of Rs 40, resulting in a new price of Rs 283.38 rupees per litre. Similarly, the price of high-speed diesel has experienced a reduction of Rs 15 per litre, bringing it down to Rs 303.18 per litre, while the price of kerosene has been trimmed by Rs 22.43 per litre, with the new price reaching Rs 214.85 per litre. It’s worth recalling that on September 30, petrol prices were lowered by Rs 8 per litre, and diesel prices saw a reduction of Rs 11 litre. The Ministry of Finance has attributed this decrease in petroleum product prices to the appreciating value of the Pakistani rupee against the US dollar and the decline in global crude oil prices.
Having such a leader at the helm of Pakistan’s armed forces is a positive sign, and the recent developments and signs of rapid economic revival reflect the COAS’s and the Pakistan Army’s deep commitment to the country. The nation is grateful to General Asim and the Pakistani Army for their efforts to heal the nation’s wounds and take concrete steps to improve the economy.
The continuous depreciation of the dollar’s value is noteworthy. At the commencement of this business week, the American currency witnessed a decrease of 79 paisa in the interbank market, concluding at Rs 276.83 in the interbank market. It’s worth mentioning that the dollar’s price has swiftly descended from its record high of Rs 332. Today, one month after these measures, positive news has started to be received regarding the economy. The crackdown against illegal dollar trade, smuggling, betting, administrative measures and reforms by the State Bank have brought positive results.
In the month of September, the rupee outperformed the currencies of the world. According to the report of the international organization, the Pakistani currency has improved by 6.2 percent against the dollar in a month. In September, the Pakistani rupee became the world’s number one currency. Today, the situation is that there is no buyer for dollars in the market, whereas a month ago, dollars were not available in the market.
Furthermore, due to declining gold prices in the global market and stringent measures taken within the country, gold prices in Pakistan have also seen a dip. At the outset of this week, the price of gold per ounce in the international market diminished by $15 per ounce to reach $1923. Simultaneously, in Pakistan, the price of gold per tola decreased by Rs 1900, and the price of gold per 10 grams dropped by Rs 1629. Consequently, the local exchange markets witnessed a per tola gold price of Rs 200,100 and a per 10-gram gold price of Rs 171,553.
The Pakistan stock market has displayed a consistent positive trajectory, benefiting investors significantly. On the first day of the business week, the stock market observed favourable business trends, with the 100 index concluding at 49,731 points, marking an increase of 238 points by the close of the trading day.
It’s noteworthy that, at the conclusion of the previous business week, the 100 index stood at 49,493 points. In the course of the trading day, the stock market witnessed transactions involving 296,340,716 shares, with a total worth of Rs 10,597,776,148.
These positive developments have been brought about by the decisive actions taken by COAS Gen Asim Munir and the Pakistan Army, which have provided substantial practical support to the government in overcoming the financial crisis.
The Pakistan Army has taken concrete measures to combat sugar and dollar smuggling, the prevention of which is considered a catalyst for economic recovery. The COAS has demonstrated a strong commitment to curbing smuggling activities by tightening border security, and the anti-smuggling operations have played a pivotal role in these recent improvements.
Gen Asim is actively promoting foreign direct investment through the Special Investment Facilitation Council (SIFC), which is poised to have a transformative impact on the country’s development and progress. Investments in the productive sectors of the economy, particularly industrial manufacturing, will be crucial for growth. Thanks to the personal interests and efforts of the COAS, friendly countries have expressed their readiness to make substantial investments in Pakistan. Moreover, meaningful reform necessitates the facilitation of small businesses and the empowerment of entrepreneurs, not solely focusing on foreign investors.
Substantial efforts to ensure political stability are also pivotal contributors to our economic recovery. The ongoing battle against terrorism and the zero-tolerance stance against anti-state elements represent key factors behind these remarkable developments.
With the reduction in petroleum product prices, government agencies are now set to address the issue of inflation. The government has announced significant reductions in petroleum product prices and directed relevant authorities to establish a price control mechanism. Furthermore, all provincial governments have been instructed to reduce the prices of essential commodities. The government is committed to taking measures that will ensure the benefits of reduced petroleum product prices are effectively transferred to the people and that this policy is rigorously enforced.
It’s important to note that the driving force behind these recent developments is Gen Asim. Personally, I am aware that he does not hail from an upper or elite class background, as his father served as the principal of a school in Rawalpindi where my father was a teacher. GenAsim is a self-made and down-to-earth personality from a middle-class family, and his understanding of the common people’s issues is invaluable.
Having such a leader at the helm of Pakistan’s armed forces is a positive sign, and the recent developments and signs of rapid economic revival reflect the COAS’s and the Pakistan Army’s deep commitment to the country. The nation is grateful to General Asim and the Pakistani Army for their efforts to heal the nation’s wounds and take concrete steps to improve the economy.
