In reply to one of phone calls to Prime minister of Pakistan, PM says that inflation is not too much in Pakistan. Instead you may visit Venezuela to see what inflation is why inflation in Pakistan?
He added that time will come when whole world will quote example of Pakistan progress & Imran khan initiatives. After listening this statement by PM, 45% people starts making fun of him.
Let me explain what really happened in Venezuela?
VENEZUELA IN LATE 90s
Venezuela is the most abundant country in oil reserves in whole world. In late 90’s this country ranked in top 20 richest countries & top 20 best economies. Now this country ranks among 20 most poor countries.
What happend to Venezuela?
Venezuela whole economy was dependent on oil exports. Almost 95% revenue was from Oil exports. This country was quite confident economy wise. In 1999 Hugo Chávez became president of Venezuela.
To better explain Hugo Chávez worked just like our former Minister of Finance Sir Ishaq Dar. In 1999 oil prices were on peak comparing that time. But as Venezuela was abundant in oil reserves so it had strong economy.
Hugo Chávez used his country oil reserves in political objectives. He started subsidizing every thing. Every private company decline started as they were not making money. Eventually private companies shut their business.
At that time still oil prices were high so Venezuela didn’t felt that its economy becoming worse day by day. The same Ishaq dar did with Pakistan’s economy he subsidized every thing & kept prices low. On the other hand to smoothen economy 5% increase in prices in inevitable for any country.
Now, recent government shut subsidizing articles & left dollar on market rates. Hence prices inflates. In PMLN reign inflation was above 10% but it was kept 4% by subsidizing every thing. Exports also destroyed due to fixed & artificial dollar rates.
No body realized at that time as economy was mostly dependent on imports. Everybody realized inflation when dollar rates increases in international market.
Hugo Chávez also started different project not needed much. For this he also got loan from different countries like china. IN spite of getting loan money back china started import of oil from Venezuela on low rates comparing to market. But Venezuela didn’t realized.
Imran khan vs Nawaz Sharif|| Hugo Chávez vs Nicolás Maduro
Hugo Chávez died in 2013 due to cancer. Nicolás Maduro became president of Venezuela. Oil prices decline started in international market.
As Venezuela economy mostly was dependent on oil so it was difficult to keep up the subsidy on all articles. In result inflation started. It was 2016 when inflation rate reaches 800%. In 2018 this reached 80000%.
In 2013 1 dollar was equal to 8 Venezuelan bolívar (Venezuela currency). But today 1 dollar is equal to 10,000 Venezuelan bolívar.
Comparison with Venezuela and inflation in Pakistan
Now, match this to Pakistan Ishaq dar polices. We also started extravagant projects. So Pakistan availed loans. We manipulated dollar price by interfering in state bank dealings. So export industry got destroyed.
Current account deficit reached 20 billion dollar. So loan returning process became difficult. This was the time when Imran khan came in to power.
Same was the case with Nicolás Maduro when he came in to power. In Venezuela inflation rate is 80000%. In Pakistan inflation is 12% right now. It is getting decline every year.
What next? Inflation in Pakistan
Current policy which is being practiced, in 2023-24 inflation would be below 5% as economy is long term process. So it is hoped that in coming years Insha’Allah Pakistan would emerge as prosperous country.
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