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Govt hints to revive CPEC to put country on trajectory of sustainable development

ISLAMABAD (our reporter):- The Federal government has hinted to revive China Pakistan Economic Corridor (CPEC) to put Pakistan on the trajectory of sustainable development by connecting Pakistan to 150 markets worldwide through the BRI.

The Finance ministry in its monthly economic report states that China has finally lifted pandemic restrictions and resumed mobility and this will result in a pickup of economic activity and provide momentum to the international economy.

International financial institutions predict that China will account for one-third of international growth during the current year. The largest beneficiaries from China’s rebounding will possibly be the oil exporters and its Asian neighboring countries, according to Goldman Sachs. As China’s yearly food imports reached approximately $266 billion and are expected to increase over the years.

Pakistan can benefit from the significant and enhanced consumption patterns of the food sector within the Chinese economy. Pakistan is a home to the Chinese flagship initiative, i.e., CPEC.

This initiative slowed down during the previous government, and it is high time to revive the program to put Pakistan on the trajectory of sustainable development by connecting Pakistan to 150 markets worldwide through the BRI.

The finance ministry in its monthly Economic Update and Outlook report states that Inflation is anticipated to remain high in the coming months before easing out gradually.

It is expected that inflation will remain around 28 to 30 percent in coming months. The key reasons are uncertain political and economic environment, pass through of currency depreciation, recent rise in energy prices and increase in administered prices. Although SBP has been enacting contractionary monetary policy, the inflationary expectation would take some time to settle.

The report disclosed that Foreign Direct Investment (FDI) reached $683.5 million during Jul-Jan FY2023 (USD 1,224.7million last year) decreasing by 44.2 percent. Foreign Public Portfolio Investment recorded a net outflow of $1,010.9 million compared to an inflow of $958.3 million during the same period last year. Total foreign investment during Jul-Jan FY2023 recorded an outflow of
USD 341.4 million as against an inflow of $1,875.4 million last year.

The Finance ministry maintained in the report that the stabilization policy of the government has been successful in improving the current account deficit by 67 percent reduction during the first seven months of the current fiscal year whereas the non-markup current expenditures are also significantly
reduced to contain the fiscal deficit.

During the first half of the current fiscal year, interest payments on the Government’s debt significantly contribute to the total expenditures, which can limit the Government’s fiscal space to carry out its normal operations, investments, and social and structural policies if the trend continues.

A couple of weeks ago, the market was corrected to minimize the difference between interbank and open market exchange rates whereas more recently, it is corrected by 5 percent appreciation of the Pakistani Rupee given its economic fundamentals.

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