One can expect little from a naïve and self-opinionated politician who after becoming PM said he would commit suicide rather than go to the IMF. Mr Khan also wanted to fill the national exchequer by selling buffalos and fleets of cars maintained by his predecessor and provide jobs to millions by distributing poultry, goats and cows. Mr Khan believed he could bring back millions of dollars hoarded by politicians abroad and that the Pakistani diaspora would send millions more to enable him to make the country prosperous. This showed that Mr Khan had little understanding of how the national economy is run, relied more on rhetoric, made blunders, subsequently taking U-turns which he described as a hallmark of great leadership.
Mr Khan depended more on hopes than on a sound economic policy. He didn’t take into view the economic picture as a whole, highlighting instead what looked like positive developments and using them for political benefit. He was jubilant over the growth of remittances forgetting that the resumption of cross border travel in the world could lead to a slowdown in growth with a month-on-month decline which seems to have set in. Khan was enthralled by the growth in exports, forgetting that with exports at only 32 percent and imports at 66.3 percent the current account deficit had widened by $1.6 billion in October, rising to 4.7 percent of GDP. Meanwhile the rupee continues to fall.
To ward off pressures on its foreign exchange reserves, the State Bank of Pakistan has signed an agreement with the Saudi Fund for Development for a $3 billion deposit which will become part of the central bank’s foreign exchange reserves. The loan is being criticized for higher than global market interest rates and tough conditions that amount to surrendering Pakistan’s sovereign immunity. Reportedly the Attorney General of Pakistan has also cautioned the Finance Ministry that waiver of the sovereign immunity may carry serious implications for the country.
Knee-deep in economic woes as Pakistan presently is, it is still difficult to believe that Islamabad has entered into an agreement with provisions as reported by media. The way to remove the apprehensions is to make the agreement public.