Col Ikram Ullah Khan

Can we stave off economic default?

Col (r) Ikram Ullah Khan 

With the departure of IMF team from Pakistan after 10 days marathon negotiations resulting in a quasi-conclusive deal with the government, the fainting hopes of saving the economy from imminent default are revived. 

The stern conditionalities imposed by the lender agency, though hard to meet as the implementation of these conditions may cost the incumbent government very dearly, yet in the absence of any other option, the bitter pill had to be swallowed. Being in a weak bargaining position, Pakistan was placed at a disadvantageous position and the balance remained tilted in favour of IMF throughout as it ordinarily happens in such negotiations.  

But the fact of the matter is that the public which is already reeling under the crushing burden of soaring inflation that has broken the feeble back of a common man, is not disposed towards accepting further economic burden in the form of a mini-budget the government is preparing to bring in the next couple of days. This will further squeeze the ordinary citizens with direct and indirect taxes on different items of daily use, particularly in the energy sector that has a direct bearing on the lives of common people. Hence, an intense public backlash is likely to come in the coming days which the tottering coalition government can ill afford. So, the government is facing a catch-22 situation. However, a more comprehensive and convincing answer to the question raised in the title may be provided by economic experts. 

With less than 3 billion dollars foreign exchange reserves left with the State Bank and a little more than 5 billion dollars with Commercial Banks which according to economic experts, is barely sufficient for two weeks’ imports, the threat of an economic default is looming large requiring an immediate economic bailout from IMF. In such a grim economic scenario, the government is left with no other choice but to succumb to IMF’s tough demands, howsoever, harsh those may be, which in ordinary circumstances are absolutely inconceivable. 

The time-tested financial wizard who was sent by PML-N supremo Nawaz Sharif to Pakistan from London to replace Miftah Ismail and save the sinking economy, has miserably failed to do so. He, who had boastfully and arrogantly claimed to bring the dollar below 200 from 225, has taken it up to 275 thus breaking all past records. 

Interestingly, Miftah Ismail and Ishaq Dar are seen engaged in a war of words these days over the failing economy throwing the blame at each other’s door thereby providing an opportunity for PTI’s incompetent economic team to get a pat on its back who had wreaked havoc with the economy during their three-and-a-half year tenure. Miftah Ismail’s scathing remarks against Ishaq Dar are quite understandable as it is difficult for the former to swallow the insult after his unceremonious exit from the ministry. 

Ironically, PM Shahbaz Sharif who is known for his impulsive outpourings and is earnestly pleading for austerity and has constituted a committee in this regard to give its recommendations for austerity measures is seen making a mockery of it when he appointed five more Special Assistants to PM (SAPMs) only a few days back thus swelling the size of the cabinet to 85, the highest number in the country’s history which could rightly be called a jumbo cabinet. So PM Shahbaz Sharif has failed to suit his actions to his words before impressing upon his subordinates to observe austerity measures. 

Having said all that, our Nero (IK) is busy in playing his lyre while the country is facing an imminent default as the Roman Nero did while the Rome was burning. Imran Khan seems to have a scant realization that he can’t be absolved from the responsibility of the prevailing economic fiasco the country finds itself in. He is equally responsible for the current economic mess. Seeing Shahbaz Sharif and his economic team sinking deep in the mire, IK laughs up his sleeve without realizing that his political survival is linked with the survival of the country. Had he not locked horns with the powers-that-be over petty issues and instead, focused on more important issues like fixing the economy, he would have a smooth sailing till the completion of his tenure and had a bright chance to secure another term as well. But he committed blunders after blunders acting on the advice of his cunning advisors who according to Faisal Wavda are the snakes in the grass. 

These days IK is seen singing a different tune every day. Initially, he had ingeniously drummed up a story of US conspiracy for a regime change, then he contrived another story blaming both the establishment and the US working in collusion against him that according to him resulted in his ouster; and now he has come up with the latest version of the flimsy story giving a clean chit to the US and holding only one man, i.e. Gen Bajwa responsible for his ouster.

Lastly, with a constant budget deficit of around 5%, consistent inflation of over 20% and with ever dwindling foreign exchange reserves, it seems quite difficult to take the country out of the deepening economic crisis in the foreseeable future. The dismal economic conditions gripping the country pose a formidable challenge for the economic managers to steer the country out of the deep economic morass it has sunk into. The fear of economic default will continue haunting us unless both the government and the opposition get united on the issue and agree to take corrective measures in this regard. With the begging bowl in our left hand and doling out ministries with the right, it sounds a lunatic’s dream to take the country out of economic crisis.

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