- But so does debt
It has been a rough ride for the PTI government in terms of the economic issues it has had to face. The slide of the rupee against the US dollar, record inflation, rising interest rates and the general slowdown in economic activity leading to joblessness are all difficult-to-defend realities. Recently, however, there have been some positives. International rating agency Moody’s raised Pakistan’s outlook to ‘stable’ while still maintaining a credit rating of B3 which is essentially a ‘junk rating’. The approval of the IMF programme earlier this year has opened other doors with the Asian Development Bank (ADB) providing a $1.3 billion loan package for ‘immediate budgetary support’. The rupee, hit a five-month high against the dollar this week owing to the increase in foreign inflows, better foreign exchange reserve figures and a generally positive market sentiment. These relative successes are however based on shaky ground. The support to the foreign exchange reserves is primarily on the back of borrowed dollars rather than significant export proceeds or FDI. Foreign inflows are being parked in government debt, close to $1.8 billion so far, which is only ‘hot money’ as investors take advantage of the 13.25% discount rate- it will leave the country as soon as there is some other market offering better, more attractive returns. Domestic revenue is also problematic with the FBR all set to yet again miss its quarterly tax target almost certifying that the massive Rs5.5 trillion annual target cannot realistically be met.
All these minor wins are therefore temporary and no matter how much the government attempts to market these as permanent major wins, it will fail. This is because politically speaking there is not much mileage to be gained as there will be no immediate let up in the issues facing the majority of the populace, still unable to make ends meet due to crippling inflation and unemployment. It would be advisable for the PTI not to start patting themselves on the back just yet, rather realise how far victory really is and what all needs to be done to achieve it. The focus should not be on qualifying for more loans, rather becoming self-sufficient to the extent that loans are no longer necessary. This was after all the promise of the party of change.