* Economy benefited by gaining over $6 billion in 2008-09
By Sajid Chaudhry
ISLAMABAD: Pakistan’s economy has emerged as the unique one, which has been the net beneficiary of the world’s financial crisis, with over $6 billion gains in the current fiscal year 2008-09, according to an analysis of the officials at Ministry of Finance on Wednesday.
Fiscal year 2008-09 that started with skyrocketing oil prices touching $147 per barrel the estimated oil import bill was projected at $14 billion. However, financial crisis in the United States and Europe along with other industrialised countries has reduced the oil demand resulting in continuous decline in world oil prices. The decline in world oil prices which started from $147 a barrel and reached to less than $50 a barrel helped developing countries especially Pakistan to lower its oil import bill projections at around $9 billion with net savings of $5 billion alone on oil import.
On the other hand, some $1 billion savings are being projected due to the decline in the prices of edible oil in this fiscal year. Similarly, declining wheat, sugar and fertiliser prices also helped Pakistan to import more wheat especially for arranging strategic reserves as well as meeting requirements of the deficit provinces with estimated savings in terms of millions of dollars.
Visible decline in oil and food prices especially wheat has been instrumental in reduction in pressure on country’s foreign exchange reserves, as it has been faced with balance of payment problem. Pakistan has been able to get $7.6 billion Stand-By-Arrangement from the International Monetary Fund (IMF) to meet its balance of payment obligations. At present problems faced by the big industrialised countries are different and problems faced by Pakistan are totally different, owing to this Pakistan and big countries are pursuing policies that are totally different.
According to the officials, at a time when big countries like United States, European countries and other industrialised countries are pursuing easy fiscal and monetary policies with fiscal stimulus of billions of dollars, interest rates are being lowered to spur economic growth and financial help packages have been announced in United States and European Union to avoid further economic slowdown.
As compared to these countries, Pakistan is pursuing tight fiscal and monetary policies to cut demand and slow down the economy to tackle the balance of payment problem. In this regard, interest rates are being increased to counter inflation and demand in the economy and imports are being discouraged despite the fact that these are the main sources of revenue generation.
Pakistan may face some consequences of world financial crisis as it is adopting tight fiscal and monetary policies in the shape of reduced exports to European Union and United States. Less remittances from countries hit by the crisis and less job opportunities will lead it an increase in poverty. However, the officials are of the view that negative impact in terms of exports, remittances, reduced job opportunities and increase in number of poverty; Pakistan would still be the net beneficiary as compared to the gains of billions of dollars.