Disguise it as it may by shows of bravado and loud proclamations by the Finance Minister and his team, default is looming that much closer, as the news coming in keeps on getting worse and more gloomy. In a week that started with the bloodbath on the stock market, when the KSE share index lost 1378.54 points on Tuesday, or 3.47 percent, to close at 38,342,71, a 30-month low, as traders exited because of a political situation marked by an intensification of the PDM-PTI confrontation with the dissolution of the Punjab and KP Assemblies. That adverse judgement was not changed by the World Bank country head’s denial of reports that $1.1 billion worth of loans had been delayed, as he said that loans depended on approval by the Board of Directors. The delay was reported as because of Pakistan’s failure to present a circular debt management plan or to raise power tariffs. The International Monetary Fund has already not released the latest tranche of its ESAF programme, and to have the World Bank pull out of releasing loans means that the already cash-strapped country is to be further starved of forex.
An indication of the shape the looming crisis might take might be discerned from the formal complaint lodged by the Oil Companies Advisory Committee to the Finance Ministry that banks were refusing to open and confirm letters of credit for oil imports. The banks are not getting the requisite forex. This sounds eerily like Sri Lanka’s descent to chaos. It began with fuel shortages caused by the country’s inability to import, leading to power shortages, and finally to riots which had the country’s President and his family fleeing into exile just ahead of enraged mobs.
Meanwhile, political leaders engage in electoral politics. What has grown glaringly essential for all political parties to sit together and agree a strategy that will take the country out of the woods. As the government has the responsibility for the economy, it has the responsibility of making all parties take part. The parties can agree to how much play they would have in managing the policy, and they can leave that to the next general election, which is due in November anyway. They all should realize that the country is bigger than they are, and there is no fun in presiding over a bankrupt country.