- As the economy tanks
Prime Minister Imran Khan’s ‘think tank’ on how to address the economic challenges emerging from the coronavirus pandemic, after holding its third meeting, with Finance advisor Dr Abdul Hafeez Sheikh presiding, has identified six key areas where their focus will be, which mostly pertains to ‘rescue and relief’ efforts rather than preparing for long-term economic slowdown and depression. Much of what the meeting pertained to are measures that are either already being implemented by other ministries and federal institutions or are recommendations that will require further discussion with relevant departments in the government to move forward. The formation of the think-tank to begin with is quite unnecessary, given how most of the members are already part of the federal economic team with just a few new faces. Stability in the financial system, which was a central theme of the meeting, is the responsibility of the SBP and therefore is up to its governor Reza Baqir to ensure. So far, the central bank, both in terms of managing the Rupee and the monetary policy vis-à-vis the discount rate has done a fairly reasonable job and it would be safe to assume that recommendations coming from the PM’s ‘think tank’ such as cutting cash reserve ratio and statutory liquidity ratio (CRR/SLR), will already be on the SBP’s agenda. On the fiscal side, the think tank will have to consult the “FBR in detail” to finalise any cut in the sales tax rates. This would indicate that the upcoming federal budget is the primary focus of the think tank at the moment, which again, is the prerogative and duty of the Finance Ministry to handle.
There are a few certainties that the novel coronavirus brings with it; illness, death and a severe shock to the economy. The handling of the virus has been riddled with confusion and incompetence and it is quite likely now that the lockdown will be lifted very soon, albeit prematurely as experts have opined. The PM is clearly therefore more worried about the economic fallout than loss of lives. Shouldn’t a think tank that he has already been formed, then, be thinking more long-term and leave the short to medium terms engagements to the already bulging economic and finance apparatus full of advisors and ministers?
