Much is being said about the dollar spike and many are saying that it will spike even more after the IMF bailout. I have heard that sources in the financial ministry have also shared their huch with some industrialists that be ready for for 180 PKR dollar.
If that is true, where the heck is this economy going? Also, when was the last time dollar went on a reverse gear? If it reaches 180, then I think it will stay above 100 for our life time atleast. This is totally devastating for the economy.
I also wonder what PTI supporters have to say about this. I never supported PTI nor any other party, but I think that while the former govts were corrupt, the current one is incapable though sincere.
Also, if anyone with better economic insight can shed light on this, how much truth is there to the theory that Asad Umer and co and giving Pakistani economy a chemotherapy by devaluing everything which was artifically kept stable? This theory suggests that these guys are in control of the situation and have a plan at hand, while I think they have no plan, are just acting impulsively at whatever new is being thrown at them and have no clue about the future.
Also, I think it's a good time to invest in dollars if you have spare money!
The problem with us is that we like to make it issue for PTI but we ignore the reality.
The problem stems from the government of PPP and PMLN and it will take long time to settle this matter. Back in 2007 our exports were somewhere around 18 billion and today they are somewhere close to 23 or billion. So in the 10 years we grew our exports by merely 5 billion while at the same time our imports increased from 40 odd billion to close to 60 odd billion. thus there is increasing gap between imports and exports.
https://wits.worldbank.org/CountryProfile/en/Country/PAK/Year/2008/Summarytext
In order to import you need $$$ which would mean we need to sell PKR to buy dollar thus leading to increase demand for dollar and less demand for PKR accordingly the market forces mean the price of dollar increase thereby reducing the price of PKR.
You cannot and should not expect PTI to fix this in any short-term, if they manage to get it in control in the next five years it will be a miracle. Its a structural problem which needs to be addressed which will also impact on growth rate, as we need to suppress imports.
However was problem created.
One major problem was lack of energy thus leading to shutting down of textile industry in Pakistan. This mean many textile industries shifted to Bangladesh who export in 2007 were about $13 billion while these increased to $44 in 2018.
https://wits.worldbank.org/CountryProfile/en/Country/BGD/Year/2007/Summary
if you look closely their textile export has increase from 5 odd billion to over 33 billion dollars. WHile we went backward they increased by 28 billion dollars.
So we lost massive export share to bangladesh, if you further analyse Vietnam their textile export also went up from mere $7 billion to over $25 billion while we went from $7-8 billion to $5 billion in that period.
So we lost massive source of income which put massive pressure on dollar. Back in the day in Australia majority good quality textile items has made in Pakistan label and now we will be luck to spot few.
Same happened with medical equipment and dental implants, Vietnam has taken a massive lead while we were left eating their dust.
Was this all PTI Fault? NO NO NO...
Rather than addressing the problem we had PPP bring in 18th amendments and smuggled billions through UAE.
Further rather than investing in industries and power sector so manufacturing and textile could boom both PPP and PML N took out massive loans to subsidies things which created a structural problem where money that was borrowed did not generate any income but put pressure on the budget has that money had to be paid back both interest and principal.
had PPP and PMLN invested in infrastructure that encouraged industries such in power sector, in water management to increase crop output we would have massive increase in export which would have meant more $$$ coming in and more taxes.
The money that PPP and PMLN has borrowed has to be returned and on top PTI Government has to manage the massive gap between import and exports. So how do you fix that? can you fix that in short period??
So stop blaming PTI and look into the structural problem that was created by PPP and PMLN. It requires time and money to fix of which PTI does not have the money so need IMF help.
Unless PTI overhauls FBR and brings in billions in taxes we are going to see big economic problem for at least next two to three years before a recovery can happen if at all.
