Foreign exchange reserves with the central bank continue to fall as talks with the IMF continue. The latest number will be updated in the next two days and there is an expectation that the figure will be below the $3 billion mark. This would be less than half a month’s import cover, at best. With the Fund in no mood to show any leniency, most if not all of its austerity-based inflationary conditions will have to be agreed upon before any default-avoiding emergency funds are released. With inflation accelerating to 27 percent last month, affording essentials for the common man will become even tougher in the days to come. Pakistan has been here before, on the cusp of default, but perhaps not as hopelessly as it is this time round; completely at the mercy of the lender of the last resort. It is therefore necessary to identify, accept and understand why we are periodically in a position where the economic future of the country, a nuclear power no less, is uncertain to the extent that it may fail.
One can point out many errors made in the short to medium term resulting in the failure of key macroeconomic indicators to improve or at least stabilize. But on the larger scheme of things, it is the abrupt and unwarranted disruption in long term economic policy and reform implementation that has plagued the country, more or less, throughout its existence. There have been no less than six finance ministers in the past four and a half years between two governments. What is more, the latest change, the unceremonious replacement of Miftah Ismail with Ishaq Dar, was as hostile a sacking as it comes, and this is within the same political party that, one would assume, was working towards a common goal.
However, the stumbling blocks aren’t limited to just the incompetency, stubbornness or premature sacking of finance minister, or any one individual, really. The malaise runs deeper, to a more fundamental recurring problem; the chaos caused by the manufacturing and dismantling of governments. The effectiveness of any economic manager and his team, no matter how talented, will always remain limited if the external forces, the string-pullers, that have expectations and ideas that are not founded in realism or sustainable economic policymaking. Pakistan will come out of this current crisis, one way or another; bruised and battered. But if it the running of the country and economy remains ‘business as usual’, it will be in another, possibly worse crisis, yet again very soon.