I wonder if this is a calculated risk even if one may question the sanity of the calculators.
CHANTILLY, VA, US: I write in regards to the government’s recent decision of not to seek either a renewal of the 2008 stand-by arrangement or a new programme with the IMF. I wonder if this is a calculated risk even if one may question the sanity of the calculators. Or is this simply a political decision as elections loom?
According to the IMF’s flagship publication “World Economic Outlook”, published recently, the global economy is entering a “danger zone”. There is much heightened anxiety and risks abound, especially in the US and Europe, two of our most important trading partners. Even the Asian countries are having to tighten their macro policies to ward off overheating pressures and subdue inflation. At this critical juncture, it is the height of folly to throw off the only source of discipline — however imperfect it might be — on the conduct of our macroeconomic and structural policies. By doing so, the government has declared open season as far as macro-policy management is concerned. Having abandoned even the pretense of reforms, many fear that this could precipitate the economy, entering a period of hyperinflation with all its catastrophic negative consequences.
During Pakistan’s last economic crisis in 2008, the country had to go through a wrenching and prolonged period of adjustment. The next crisis, whose seeds have now been planted, could be much worse and inflict the much needless pain, especially on Pakistan’s poor and vulnerable citizens. They deserve better.
Meekal Ahmed
Published in The Express Tribune, September 24th, 2011.
