Diagnosis not enough

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FEDERAL Minister, Miftah Ismail, on Friday, acknowledged that the national economy was under severe stress adding Imran Khan had left the economy at a point that it would not be an easy task to put it back on the path of stability.

In a related development, Defence Minister Khawaja Muhammad Asif asserted that the Pakistan Muslim League has decided to take allied parties into confidence within 48 hours before announcing a major decision related to economy in an attempt to bring stability to the current volatile situation.

There are hardly any two opinions among those having insight into the country’s economy about the factors highlighted both by Miftah Ismail and Khawaja Asif as responsible for the prevailing alarming economic situation.

PTI leaders are trying to attribute blame of the malaise on the new Government, which was there just for a month, but bad economic management of the previous Government was evident from repeated changes in the Ministry of Finance and Federal Board of Revenue (FBR).

One has to concur with the incumbent Finance Minister that PTI left the economy on the brink of collapse, as they secured the highest-ever loans of over Rs20 trillion during their tenure.

Similarly, free fall of rupee during entire period of the past Government, Imran Khan’s deal with the IMF on toughest conditions and then its violation at the fag end of his tenure, difficulties in bilateral relations with China and Saudi Arabia and unnecessary criticism of the United States and the European Union also played their part in accentuating the economic and financial crisis.

Miftah Ismail has legitimately pointed out why the rupee was allowed to depreciate from Rs.115 in 2018 to Rs.189 at the fall of the PTI Government as this was the major reason behind back-breaking inflation in the country.

It is also widely believed that PTI’s decision to lower/freeze prices of petroleum products in the backdrop of rising prices of oil in the international market and a temporary subsidy on electricity charges were akin to landmines for the new Government as their reversal has political consequences and their continuation could push the country towards the path of bankruptcy.

The IMF is not in a mood to release the remaining tranches and the promised additional relief assistance until and unless the Government withdraws these measures and Saudi Arabia too has linked its aid to finalization of a deal with the IMF.

However, mere apportioning of blame and diagnosis of the problem would not resolve it as the state of indecision is taking a heavy toll on the economy, which is evident from further loss of rupee value and mayhem at the Stock Exchange.

It is feared that the rupee would not stabilize unless satisfactory arrangements are made for foreign inflows.

The Government is not increasing prices of petroleum products for fear of another vicious cycle of price-hike but daily devaluation of rupee is creating exactly the same problem and that too without any prospects of an improvement in the inflows.

Under these circumstances, the Government needs to take tough decisions without further loss of time to avert the spectre of bankruptcy.

The negative impact of such decisions can be mitigated by subsidizing oil prices for public transport, banning unnecessary imports and bringing down prices of food items.

Economic portfolios are surely with PML(N) ministers but it is necessarily a coalition government and PML(N) cannot own the burden of unpleasant decisions.

According to media reports, some important decisions have been taken to help tackle the economic challenges and improve the fiscal position of the country but these would be announced only after necessary consultations with the leaders of the allied parties and approval of the federal cabinet.

The very fact that the Government is willing to take politically difficult decisions is also an indication that the possibility of early polls is receding.

Interests of the country are more important than political expediency and, therefore, people would, hopefully, extend their cooperation to the Government in stabilizing the economy.

The Government also needs to come out with an appropriate plan to remove constitutional and legal hiccups that are impeding the smooth functioning of the federal as well as the provincial government of Punjab besides evolution of a workable strategy to deal with the impending long march in close consultations and coordination of all stakeholders.

This is important to stabilize gains on the economic front.

 

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