- Or yet to come?
The global spread of coronavirus has already reached apocalyptic proportions. In Italy, the death toll has surpassed even that of China, the original epicentre of COVID-19. Advanced economies like the US, UK, France, Spain and Germany are badly affected with substantial number of deaths at the hands of the pandemic.
How long Pakistan could have remained immune to it? When the first case of the deadly virus emerged in Sindh it was viewed as a ‘Sindh problem’. But lo and behold, soon the proverbial hit the fan.
Now, as is the nature of COVID 19 virus, it is multiplying exponentially all over the country. Three persons, two in KPK (Khyber Pakhtoon Khawa) and one on Sindh have already died at the hands of the deadly disease.
How swiftly the pandemic is spreading can be judged from the latest count. It has ballooned manifestly from 28 on March 13 to over 700 within a week.
One fails to comprehend why Khan shuns his own media and doesn’t answer relevant (sometimes unpleasant) questions? His predecessor Nawaz Sharif would also avoid the media (except those his favourites) in the same manner.
Those affected in the whole of South Asia are slightly less than in Pakistan. Naturally we have gone wrong somewhere in our efforts to tackle the virus.
This is alarming. Although the Sindh administration quickly rose to the challenge, the rest of the government at the centre and other provinces has been a little slow in meeting the threat.
Initially, ostensibly, the federal government was in a state of denial and now in a state of shock.
Full marks to SAPM (special assistant to the prime minister for health) Dr Zafar Mirza for making herculean efforts to announce measures to contain the spread of the corona virus. But he alone sans massive human and financial resources needed to meet the existential challenges- as a result of the rapid spread of the pandemic- couldn’t do much.
The government is now faced with multifarious fresh challenges. Evolving a comprehensive and workable strategy is the foremost.
Secondly, there is a woeful lack of human and financial resources. But perhaps the third most important fallout is the imminent economic impact of the disaster.
The prime minister, since the advent of the pandemic, has only addressed the nation once. That also briefly and in a lacklustre manner.
All he had to say in the speech to warn his compatriots: Corona will spread but, ‘aap nei ghabraana nai hai’ (do not panic). A roadmap on how to meet the massive fallout in terms of human and economic costs of the spread of the COVID-19 was completely missing from his narrative.
One fails to comprehend why Khan shuns his own media and doesn’t answer relevant (sometimes unpleasant) questions? His predecessor Nawaz Sharif would also avoid the media (except those his favourites) in the same manner.
The prime minister has appealed to international financial institutions to write off loans of poor and resource deficient countries like Pakistan. But what is still missing is a comprehensive stimulus plan for the business and industry and a relief package for those adversely affected by the negative economic impact of the virus.
Most disappointing was the SPB (State Bank of Pakistan) governor Reza Baqir announcing a mere 0.75 percent reduction in the policy rate. At 12.50 percent now, it is still too steep.
According to most economists, with inflation bound to come down as result of crude oil selling at a historic low of under US dollar 30 per barrel, the interest rate should have been reduced to single digits in order to have a real impact on the economy.
But Khan’s economic team composed of former IMF (international Monetary Fund) and World Bank apparatchiks are fixated upon their own jaundiced mantra. Reza Baqir’s last appointment, before becoming governor State Bank, was as the Head of IMF’s office in Egypt.
Under the strongman of Egypt general Abdel Fattah el Sisi the formula of high interest rates was successfully applied under an IMF program during Dr Baqir’s tenure. As a result, foreign investors were happy to park their sums in the Cairo treasuries for windfall gains.
The same formula is being applied in Pakistan and it has attracted more than three billion dollars of ‘hot money’ to flow into the country’s coffers, offering a lot of support to the external account. But as predicted when the going started getting rough the fly by night operators decided to decamp with their funds.
According to SBP data, USD 1.28 billion has already left the country. If interest rates have been only marginally reduced to prevent the hot money leaving the country, the strategy simply has not worked.
In the wake of the latest recessionary world economy that is being compared by some to the great depression of 1929; interest rates were bound to come down. The US has already cut its interest rates to virtually zero.
We seem to be terribly slow in adopting a proactive approach in the face of new realities. Although oil prices have dipped, the government is still mulling over how to pass the reduction to the consumers without disturbing its revenue stream.
As it is, meeting stringent IMF conditionalities- especially in the domain of tax revenue and fiscal deficit- was a virtual impossibility. But In the post coronavirus order, the Fund demanding compliance would be asking for the moon.
Steep revenue targets being envisaged in the next budget will also be impossible to meet. An already battered economy is simply too emaciated to have the capacity to pay increased taxes.
Perhaps it’s time the government makes a formal request to the IMF to renegotiate the package that it is simply not able to follow nor pay back. A marginal increase in exports is going to be whittled away in the changed international economic scenario.
It is time to announce a stimulus package to restart the stalled engine of growth in order to stimulate domestic economic activity.
Similarly, millions of those, including daily wagers, out of job as a result of impending shutdowns need to be provided with a safety net.
BISP (Benazir Income Support Programme) that the government for reasons quite obvious, prefers to call the Ehsaas programme, has proved itself quite incapable of performing its core task. Out of the Rs 274 billion earmarked in the poverty alleviation programme, merely Rs 27 billion have been disbursed.
The rather bookish, albeit well-meaning chairperson of the BISP Sania Nishtar, has been too busy doing a forensic audit to unearth those not entitled, misusing the programme; in the process throwing the baby with the bathwater. There is need not only to increase the outlay for BISP but also to make disbursements on a war footing.
With the COVID-19 virus spreading so rapidly, the government and its economic advisors should quickly outgrow their present state of inertia. Decisive steps should be taken without further ado.
