Dismal scenario

There seems to be a deviation at work with the IMF. Islamabad has almost given up on its hopes for a renewed deal with the international lender, and its sixth EFF programme is in doldrums. Finance Minister Ishaq Dar on Wednesday formally hinted at end of the road with the Washington-based donor, and regretted that efforts to revive the facility with another tranche of $1.2 billion have hit rock-bottom. This means a tough road ahead for Pakistan as it gropes in the dark with an imminent fear of default. With the embattled government jotting down recommendations for the annual budget, the country is economically on the edges.

This means Pakistan will be flagged once again by the credit agencies, and its ratings will fall further. The widening trust deficit will be a toiling factor at a time when the government faces a severe balance of payments enigma. The greenback has already surmounted to new heights and is being traded well above Rs308 in the open market. Coupled with this is the dilemma of slumping forex reserves that sit at less than $3 billion, and dismal exports. Remittances have also taken a nosedive primarily due to the unabated political instability. Last but not least are the reports that the economy in a year’s span has plummeted to 0.3% from a staggering 6% during the previous dispensation. As the Economic Survey for FY23 is being formulated, there are horrible indicators of degeneration in all walks of economic halves.

Businesses, on the other hand, are now openly scolding the government for suffocating the economy and the industry by curbing imports. Thus, a sovereign default is forecasted at a time when banks and commercial entities are struggling to make ends meet. Not much is there to hope from the industrial and services sectors that face stagnation. The only consolation, however, is growth of 1.6% in the agriculture horizon, despite vehement floods and destruction last year costing the economy a loss of $18 billion. This warrants an entire new paradigm to stay afloat when inflation rules the roost with a 59-year high.

Published in The Express Tribune, May 26^th, 2023.

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