AS a delegation of the International Monetary Fund (IMF) is due to arrive in Pakistan on 31 January for the ninth review of the Extended Fund Facility, Prime Minister Shehbaz Sharif has expressed the confidence that a deal will be struck with the Fund, which would pave the way for release of the stalled instalment and subsequent inflows from multilateral and bilateral sources.
Addressing the inaugural ceremony of the Green Line Express Train Service in Islamabad on Friday, he acknowledged that the country was in a difficult economic situation but expressed the confidence that it will successfully overcome the challenge as the courageous nation stands united to brave the situation with resilience.
But the very fact that even a magician like Ishaq Dar could not deliver as per his stated vision and expectations of the people is manifestation of the reality that the economic malaise was worse than previously acknowledged by different stakeholders.
The sense of satisfaction expressed by the Prime Minister over the possible deal with the IMF is understandable as foreign exchange reserves have plummeted to a dangerous level, prompting the Government to prepare a priority list for imports including food and medical items.
The un-announced ban on imports, restrictions on opening of letters of credit (LCs) and non-clearance of consignments at Karachi port has already sparked shortage of some commodities and a record surge in prices of items including poultry meat that has crossed the barrier of Rs 600.
Therefore, the imminent deal with the IMF and the resultant inflow of foreign exchange might help ease the situation to some extent both for the Government and the people but no major relief for the inflation-ridden masses is expected in the short term.
This is because the conditions that the IMF has imposed for resumption of the loan money have already brought a tsunami of price-hike as the rupee has been left at the mercy of circumstances.
According to the Exchange Currency Association of Pakistan’s closing rates, the rupee dropped 2.67 per cent in the open market to trade between 266-269 per dollar.
In the previous session, the currency declined by 7.81 per cent. As cap on the exchange rate has been dropped, the rupee has continuously been falling which is being seen as a shift to a market-determined exchange rate but informed circles believe commercial banks, hoarders and smugglers are having a field day playing havoc with the local currency.
The inability of the Government to check manipulators should be a source of concern for all but no one knows why planners and decision-makers have closed their eyes to this phenomenon.
The situation is so volatile that some currency dealers said the late Friday evening rate of the open market rate was Rs275, which speaks volumes about the crisis.
As the rupee depreciated by 13.7 per cent against the US dollar in just two days, the one-tola gold rate for the first time crossed the Rs200,000 mark despite a $6 drop on world markets to $1,936 per ounce on Friday.
One can imagine the impact of the devaluation of the rupee when prices of petroleum products, gas and electricity tariff and all imported items are revised upward in the coming days.
Minister for Finance Senator Mohammad Ishaq Dar on Friday blamed Pakistan Tehreek-e-Insaf (PTI) Chairman Imran Khan for inflation and the current crisis in the country, challenging the former prime minister to a live debate on economy.
Apportioning blame on the previous government might be correct as it followed wrong policies but the question arises why there was no slightest improvement in the situation since April last year when the PTI government was voted out.
IMF deals are not bad if they are concluded as a transitory arrangement followed by concrete measures to help the national economy stand on its own feet but regrettably this has not happened in Pakistan.
It is because of the flawed and stop-gap policies of the successive governments that today Pakistan is trapped in a vicious cycle of debt as it has to seek more loans to pay back previous ones.
The situation demands the political uncertainty must end and a clear road-map prepared to salvage the economy.
The Government certainly has the vision to put the country on the path of sustainable growth but it needs support and cooperation of other stakeholders to move forward with confidence.
