Automobile policy was the work of the last govt. They did not get time to reap its "fruits". I am not talking about low parts localization in this govt. This has been a problem plaguing the auto sector for years. it is not going to change in these 3 or 5 years (no policy incentive/pressure to localize). Other governments could not have dreamed of the latitude IMF gave in terms of fiscal relaxation due to the onset of Covid. In fact, IMF released 3 billion USD (was it or 1.5 billion) to Pakistan as part of its drive to pump liquidity in the global economy to keep it afloat in the early days of the pandemic (other countries also received this monetary injection proportionate to their credit share in IMF portfolio. The stimulus government gave in Pakistan came from that money (hence no need to print additional money). Regardless, the money in circulation increased drastically (how did it happen if no new/extra currency was printed). That extra money in circulation is one of the drivers of the inflation you see today. Stimulus-induced inflation is also raging in the US (this phenomenon is separate from the global commodity supercycle-induced inflation).
IMF programme under precious government was given with
minor prior conditions in its initial years because the situation was much better when PPP left, exports were around $24-25b, CAD was around $3b, debt (principal and interest) repayment were meager.
Within months after the programme ended your economy started deteriorating SBP printing money supply was increased, rupee was highly overvalued , there was a need for an another IMF programme along with strict fiscal and monetary policy adjustments, none of the 3 things happened ( not to mention devaluation). Your credit ratings were downgraded later on.
You kept it running, the bulk of 7t sbp printing came in last 2 years. No notion of either monetary or fiscal adjustments.
Your inflows, exports were the same ( even dropped to roughly 21-22b in the middle) and remittances were stagnant for 4 years, imports grow with time it has to be covered with inflows to a degree if one needs to grow in a sustainable way, this did not happen. This is the root cause as our inflows were very much like they were in 2013 as compared to our import needs to sustain growth.
I will tell you something really interesting about auto policy, they started making the policy in 2013 and by 2018 there were still 3 major players even though auto policy was I think released in March 2016. Do you know what was the major hurdle even though auto makers with plans and investments were there ( that is true) because of the import of cars with little duty not to mention the rampart import of 2nd hand cars from Japan etc. To make a policy work a conductive environment need to be created otherwise it will never attain full potential no matter how good the policy is.
I think lucky motors was one of the first, when did they actually start work on their production plant?
Big words like 'to dream off' is an exaggeration when the total amount was just $1.3b something under RFI.
Monetary policy was relaxed only ( interest rate was still more than plmn) which led to rapid increase in credit uptake by businesses along with consumer financing.
You are going in the wrong direction. I got that the point you wanted to make was liquidity due to corona package.
Overall the corona package was around 1200b. ( actual spending is much lower)
Only a small portion of it was direct cash handouts. It was more of a support package thinks like giving the businesses relaxation in debt payment installment with government taking care of interest or penalty charges, subsidies on basic food items through utility etc etc.)
The major reason was significant increase in remittances ( do the calculations keeping in mind the pkr value, their dependants or they themselves are going to spend, property cars clothes restaurants etc ) and the increase in exports ( how much did they grow in pkr terms? a good amount of it is money going into all the local input costs farmers transport labour utility shareholders etc ).
