AT long last, there are visible signs of marked improvement on the otherwise dismal economic front despite ongoing political tussle and an atmosphere of confrontation between the government and the opposition PTI, especially in the backdrop of the latest verdict of the Election Commission of Pakistan (ECP), which held PTI guilty of illegal fund-raising.
Economists and analysts believe a positive statement issued by the International Monetary Fund (IMF) declaring that Pakistan has fulfilled all the pre-conditions for the release of the withheld financial package sent a positive message to the market and as a result things have started improving for the country.
The most worrying aspect of the entire situation was the free fall of rupee, which traded at 238 a dollar on Tuesday but made highest single day gains of 13.5 rupee in the open market and 12.5 in inter-bank trade on Wednesday.
This is said to be over two-decade high since 1999 and the rupee saw its first major recovery after a gap of over three months after the Government reported a massive drop in import payment.
Apart from the IMF statement, the reports about firm commitments by some friendly countries to meet the financing gap for the current financial year also contributed a lot in pacifying the business community.
Saudi Arabia is reported to have given assurances to the IMF in this regard, China has agreed to roll over a $2 billion loan for a year and negotiations are in progress with Beijing for additional funding while there are bright prospects for enhanced economic and financial cooperation with Qatar and the United Arab Emirates.
The IMF had linked the possibility of holding a planned Executive Board meeting by the end of August once adequate financing assurances are firmed up.
These developments turned exporters to panic and throw their withheld money into the open market.
Taking cues from Bangladesh where strong action against manipulating currency exchanges reversed devaluation of Taka, the State Bank of Pakistan also sprang into action against currency dealers guilty of disregarding rules and regulations.
There was a justified impression that mind-boggling devaluation has much to do with manipulation done by some influential figures and we hope FIA and other agencies would also move against them as no one is above the national economy and national interests.
It is rightly said that the rupee value was manipulated in the market by vested interests after realizing the inability of the central bank to defend it as it was unable to intervene due to fall foreign exchange reserves but administrative action should have been taken much earlier to avoid the downslide.
The problem of manipulation can be gauged by the estimates of some forex dealers that a huge stock of $4 billion was hoarded by different elements, equivalent to the amount that Pakistan is seeking from friendly countries to bridge the financing gap.
Steps taken by the Government to reduce import bill and the falling prices of oil in the international market also eased pressure on foreign exchange reserves.
Stock market has also reacted positively to these developments as it witnessed an increase of 877 points while gold price fell by 8600 rupee a tola the same day.
It is an indisputable fact that the coalition government, especially its main constituent PML(N) as well as people of Pakistan suffered a lot because of the tough decisions and measures that had to be implemented during the last three months to support the economy.
PML(N) risked its popularity and received serious setbacks in the recently-held by-elections in Punjab (which were swept by the opposition PTI) while people of Pakistan are witnessing the worst ever inflation in decades.
It is hoped that positive gains of Wednesday would not prove to be a transitory affair and the government and relevant institutions would take firm measures to take the process towards a meaningful success.
Stability of the rupee should be the top priority of the authorities concerned and Minister for Finance and Economic Affairs Miftah Ismail, who stated a few days back that inflation and growth were never his priorities, should now focus on both of them as these are the real concerns of the masses.
Electricity bills for July are just one indicator that the current situation is unsustainable for people, especially the poor and the middle class as an average family has received bills ranging from Rs.10,000 to 20,000 i.e. equal to or near about their total monthly income leaving almost nothing to spend on other heads.
They are left with only two options – live in the dark or face starvation, a pathetic scenario that an elected government can hardly afford for long.
