Burdened economy

As the 6th IMF programme, the harshest in history, comes to an end, the government remains fingers-crossed

Pakistan economy is in a struggling mode. Though its macroeconomics indicators are defined, it is a plethora of external factors that is derailing it off and on. The surging current deficit and plummeting of rupee is primarily owing to oil and spiraling food prices on the international market. Furthermore, the fact that imports are pouring in despite curbs installed on them and inflation is uncontrollable are worrying symptoms. As the sixth IMF programme, the harshest in history, comes to an end in September, the government remains fingers-crossed as to what’s next. The slippages in achieving budgetary targets are likewise a writing on the wall, and the concern is that the strategy to stem the rot is not picking momentum.

A governmental report says policy measures to contain imports couldn’t create an impact. The good aspect, thus, is that exports grew by 29 per cent during the first half and reached $15.2 billion. Textiles led from the front, with a growth of 26 per cent, along with sustained remittances to the tune of $15.8 billion, showing a growth of 11.3 per cent during the first half over the same period of last year. These are consoling factors at an adverse time, and are soothing to keep the wheel of the economy turning. But one thing is certain and that is an ill-will coordination between various cabinet ministries and the State Bank, and their inability to buck up on microeconomics. The result is missing of budgetary goals and persisting inflation which is eating away growth. This has to be addressed in totality.

There are more whooping worries as the country registered a current account deficit to the tune of $11.6 billion in the first six months of the current fiscal year, and the government swallowed its highest single-month deficit of $2.6 billion. This is untenable. The least that is needed is setting new benchmarks and consistently going after them. It is a foregone conclusion that auxiliary imports should be totally scrapped, and even necessary one scrutinised to the core. This swirling twin deficits are a looming threat. They have to be taken care of. The sooner the better.

 

Published in The Express Tribune, February 28^th, 2022.

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