The embattled economy
The economy is perturbed at the hands of political turmoil, and is plummeting with each passing day. This week witnessed a run on the mill as bourses bled to the worst and the rupee crossed the psychological barrier of 185 to a dollar. As if this mayhem is not enough, the black warrants came from the International Monetary Fund, which tactfully chose to call it a day on the $6 billion contested programme, and paused its effective implementation till a new political dispensation was sworn in. There couldn’t be any harsher scenario for the economy at a time when it was hardly picking momentum, and this is all owing to the brinkmanship in the corridors of power.
With little to do the economy is in an auto-mode. Its free fall to say the least, as economic managers are sent packing, and the day to day tirade is in the hands of sleuths who are clueless to the core. Political jingoism and misadventure on the part of the self-dissolved government is taking a toll. Prime Minister Imran Khan’s decision to annihilate the entire system has dealt a deadly blow to whatever rectification his government had managed to set in. It is bizarre to even imagine that investors will be breathing normally, and there can be any positive trend as far as trade and industry is concerned. The uncertainty is leading to more fragility and the icons of doom are a possible rise in oil prices and abject inflation, coupled with current account and fiscal deficits that are sky-rocketing.
What is the way out? Pakistan is in need of astute economic management, which should be free from egoism. The salient features are horrible: the trade deficit has swollen to $35.4 billion during the current fiscal year, and exports are constantly dipping. The rupee stands devalued by more than 60 per cent in a crude attempt to stall imports. But that is not working either. To further complicate the situation are reports that reserves are shrinking and stand at $12.5 billion by the end of March, which means expats’ inflow of cash tranches too are taking a backseat. All it needs is an injection of confidence and a roadmap to sail through.
Published in The Express Tribune, April 6th, 2022.
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