A matter of trade

PM's intervention will be necessary to get deal back on track, we are grateful that he seems cognisant of his role.

The government’s consistency in pushing for greater market access for Pakistani goods in foreign markets is one of the few positive highlights of its economic policy, the most recent example of which was the prime minister calling upon the European Union to seek WTO approval for its temporary trade concessions. Unfortunately, when India raised objections to the deal, the EU began to get cold feet. The prime minister’s personal intervention will be necessary to get the deal back on track and we are grateful that he seems cognisant of his role.

Earlier last week, the administration sent a trade delegation to Turkey to seek more open access to the fastest growing market in the European region. Such measures are consistent with the first half of the president’s mantra of “trade, not aid” and we applaud the government for its efforts. But we would like to remind it that trade concessions alone will not get the country anywhere in terms of reviving economic growth. Even as the government was busy courting trade deals abroad, economists at home were pleading for urgent fiscal reform. Unless the government is able to curb its own deficit, the private sector will not have any room to breathe and all the trade concessions in the world will not be enough to keep businesses afloat.

As things stand right now, the government is borrowing nearly the entire available lending portfolio of commercial banks, leaving almost nothing for the private sector. It is also printing money at absurd rates, sharply raising inflation levels — and thus interest rates — to levels that make it all but certain that a new financial crisis is just around the corner. So while we applaud efforts to increase Pakistan’s market access, we would like to say that economic policy efforts are futile unless there is a serious plan to combat the ballooning fiscal deficit.

Published in The Express Tribune, January 27^th, 2011.