AS saner elements like Fawad Hassan Fawad, former Principal Secretary to the Prime Minister, are making fervent calls to ‘save Pakistan’ warning that the country was in an economic meltdown and attempts to prolong the political confrontation would accelerate the process, the Government seems to be optimistic that the country was moving in the right direction and there was nothing wrong with the economic indicators.
Addressing a news conference along with Defence Minister Khawaja Muhammad Asif, Minister for Finance and Economic Affairs Miftah Ismail assured that there was no possibility of default, imports have declined and also believed that the rupee has stabilized.
Separately, Energy Minister Khurram Dastgir asserted that stocks of petroleum products were at ‘record level’ while the Defence Minister called for reducing the size of the Government as much as possible and asked the bureaucracy to share the burden of difficulties being experienced by the country.
It is, of course, the responsibility of the cabinet members to keep hopes alive and rightly so as the Government, on its part, has been making frantic efforts to avoid a default and bring the economy back on track.
Successful negotiations with the International Monetary Fund (IMF) and fruitful contacts with some friendly countries raised hopes about return to normalcy but unfortunately the most important factor of political stability seems to be beyond the control of the Government and it is in full swing after by-elections in Punjab.
The political turmoil triggered by the outcome of the by-polls has sent shock-waves to the local and foreign investors as well as the business community and their reaction is reflected in tumbling of the stock market and record devaluation of the rupee.
There is a semblance of chaos as an impression is gaining grounds that administrative and legislative decisions are also being made by the judiciary, limiting options of the elected Government to manage affairs of the State as per its own strategy and experience.
The government risked its popularity by taking tough decisions and measures that have added to the woes of the common man in the hope that these would help bring the economy back on track but political challenges are depriving the country of real benefits of these decisions.
The uncertainty about the future of the government is sending wrong signals all around and the situation could worsen in the weeks to come.
The situation is really worrisome as power players are not ready to behave despite the fact that the country was getting deeper into economic turmoil with the passage of every day.
Taking the rhetoric to a new level, PTI Chairman Imran Khan on Thursday announced that his party would not contest the next elections if the Chief Election Commissioner Sikandar Sultan Raja was not removed.
On the other hand, Maulana Fazlur Rehman, whose JUI(F) is one of the coalition partners, made hard hitting statements during his news conference in Bannu demanding arrest of the PTI leader.
The PDM chief also warned that he will make the earth so hot for Imran Khan that his supporters will not be able to place their foot on it, threatening the ousted premier to “stay within his limits”.
All this is happening at a time when the IMF is apparently dragging its feet on finalization of the deal with Pakistan for release of next tranches with serious implications for external inflows (from other sources).
Under these circumstances, foreign exchange reserves are fast depleting and this is evident from the fact that the reserves held by the central bank fell to $9.329 billion due to debt repayments, enough only to cover imports worth 1.6 months.
Experts say the reserves have been dwindling on the back of higher current account deficits amid higher growth in imports.
The increasing foreign debt repayments with drying dollar inflows worsen reserves’ position.
It is also intriguing that the Government is watching nose-dive in the value of rupee as a silent spectator as corrective measures are not yet seen despite concerns expressed by the Prime Minister as its parity reached 227 a dollar.
As a combined effect of the continued devaluation and increase in prices of POL products, the inflation has reached back-breaking levels and in the words of Defence Minister Khawaja Asif, these measures have pushed millions more below the poverty line.
In this backdrop, we have no time to waste and it is the responsibility of all stakeholders to sit together and mull over options to bring political and economic stability before the situation becomes irreversible.
