Reza Baqir

Pakistan’s Emerging Economic Team Accompanied By Reza Baqir

Logical Analysis

What is PM Imran Khan’s government all about? Well, eventually after months of fumbling an emerging team is observed!

Now there is at least a team, an idea and a direction and these candidates will be equipped for and serious about the positions they will be occupying.

However, Imran Khan has an important problem! It is claimed that the structure of this emerging team is similar to the way followed by the former government. But the results could be different this time.

Although a road is leading forward and a direction is in existence, it still is the same road and direction which three former governments had followed.

Importantly, some of the managing nominees are still the same candidates!

Although it is a known fact, it is worth repeating. After the budget, when the macroeconomic adaptation under the careful advocacy of the IMF-programme starts, the government’s management will be almost entirely moulded and supervised.

After the adaption things will get tougher and fewer expensive ceremonies, photo shoots as well as empty promises would be affordable.

Such empty gestures must be seen at the backdrop of the extensive constriction which will be caused in the economy, such as crushing buying power as well as cutting employment!

In tough times when inflation is rising and unemployment is high, politicians who will be waving and smiling at their citizens will easily be ridiculed and mocked.

PM Imran Khan’s political style and portrayal will have to be readjusted in an according manner.

Whilst Reza Baqir will be entering the State Bank, rumours of the recent Egyptian experience regarding a programme of the International Monetary Fund are circulating.

Reza Baqir’s Key Role Just on launching Pad:

Baqir was the resident representative of the IMF in Egypt for some years when a very stringent programme since 2016 was implemented in Egypt.

Egypt was granted an Extended Fund Facility amounting to $12 billion. However, this is coming to an end now with the implementation of the final benchmarks. And now we see, IMF has given green signal to give a package of $ 6 Billion in installments. At least it will help our Pak economy to get a stable position for some years.

At a distance the IMF programme seems to be similar. However, with closer observation, differences do emerge, due to the fact that each country is unique, like Egypt and Pakistan.

Comparison between Egypt & Pakistan


Egypt’s foreign exchange reserves fell severely after their economy suffered a debilitating decline. This occurred after 2011’s events as well as Hosni Mubarak’s ousting.

  • From 2011 to 2016, an average growth of 2.5% annually
  • Inflation rate – 14%
  • Unemployment rate – more than 13%
  • By 2013 their fiscal deficit reached 14% of the GDP
  • In 2014 the government’s gross debt topped 90% of the GDP

Current Statistics:

  • Above-mentioned indicators are better now
  • Gross debt is near to 86% of the GDP
  • Growth rate – near to 3%
  • Inflation rate lower than 9%
  • Fiscal deficit – lower than 8% of GDP, at its worst

The projected Egyptian requirements of their external debt-servicing are actually smaller than those projected for Pakistan.

Subsidies Are Not a Lot in Pakistan:

Subsidies play a major role in the Egyptian government’s expenditure which seem to be a complicating factor for them.

Almost all things are subsidised, ranging from fuel to tobacco to bread! About a quarter of the Egyptian government’s expenditure is subsidized in comparison with Pakistan where subsidies are lower than 5%.

Egypt is a net importer of food and energy, and has inadequate room to revoke such subsidies without causing extreme pain to their population.

Under the IMF programme the government was obligated to do that. In turn this caused a 48% devaluation in their Egyptian pound in 2016.

They were scaling down these subsidies to a stage where full cost recovery is now promised regarding certain fuel segments. Actually there was little progress in decreasing expenditure subsidies.

Political turmoil averted a powerful economical focus since Mubarak’s rule came to an end. Turmoil was continuing until General Sisi came and ended alle politics!

Mubarak’s ousting, in 2011, which seemed to be a revolutionary moment, turned into extensive feuding, whilst the economy folded.

The Egyptian economy emerged with a status quo which have been observed since 1979 with an IMF programme and a military leader.

In various ways the Egyptian crisis was much more severe when compared to Pakistan. The fiscal consolidation required from Egypt over 3 years, represent 5.5% of GDP in comparison to the 4.5% currently required from Pakistan.

The level of trust between the Egyptian government and the IMF seems to be somewhat better than in Pakistan.  Seeing this at the backdrop that Egypt’s programme had two annual reviews.

In general Pakistan has to submit quarterly reviews, whilst it is possible that there might be some other reasons for this.

Nonetheless, Reza Baqir has intimate experience when it comes to the Egyptian macroeconomic adaption, as he was in a ringside seat at that stage!

The governmental finances of Egypt, are to a greater extent invested in funding consumption, compared to Pakistan.

Pakistan’s expenditures are mainly focused on development spending and paying government bills.

Pakistan’s economy Driven by Consumption:

However, Pakistan’s economy is driven by consumption, similar to the majority of other world economies which experienced liberalisation during the last few decades.

Egyptian authorities are required to represent a 2% primary surplus, nonetheless the all-inclusive fiscal deficit persists above 8%.

However, it is expected that the primary surplus must continue for a lot of years to come attempting in bringing down the overall debt levels.

The same concept is followed here, as summarized below:

Programme Intention:

  • Bring about a primary surplus in governmental finances;
  • Accomplish currency flexibility;
  • Reducing the fiscal deficit comprehensively;
  • Restoring economical sustainability

Following the above-mentioned pointers, the government of Imran Khan will just look similar to all his predecessors apparently but this time they are going to introduce new systems. We should hope a real change in economy as well. Out politics is not the same anymore. A lot like the Egyptian government when they had to undertake their adjustment.

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