Ailing economy

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What Minister for information Fawad Chaudhry admitted on Friday about failing the middle class was already a common knowledge. It was no revelation. Worryingly enough, the govt now at the helm for nearly six months, keeps on harping on the issue of poor performance of the past two governments instead of focusing on setting it right, the very reason people voted them in for.

The PTI has taken a simple line since it has come into power: it has had to make hard choices. One can certainly sympathise with the need to make choices that are tough. Yes, they inherited an economy with the highest-ever $19 billion current account deficit. However, Prime Minister Imran Khan’s claim a couple of months ago that there is no economic ‘crisis’ is something bizarre. There is no reason to panic, but there are strong grounds for concern.  What can be said about the irony of the claim that the greatest achievements of this government in the promised 100 days were to ‘increase gas prices, increase electricity prices, increase taxes, increase the interest rate, and devalue the currency. The rupee saw the largest single-day plunge it has experienced in almost a decade.  Nonetheless, it is not fair to blame PTI for all of this.

The economic problem we now face cannot be traced solely to the previous government’s stubborn refusal to adjust the overvalued exchange rate. Our economic managers appear to have lost the plot over the last two years. For one, they were unable to keep track of CPEC-funded investment flows, whose exact form of financing has never been made transparent. The second and perhaps more important reason for our plight is that the federal and some provincial governments decided to go on a spending spree — launching projects, oblivious to their cost and foreign exchange implications. This is not new: the last two governments were equally guilty.

Now, PTI is trying hard to fix these problems and they should be commended for this. Now Pakistan is in a situation, where it can negotiate with the monetary body and can manage to get a package that favours the country as well.  Nonetheless, transparency and openness is essential if the government wants to build confidence around the economy. It should treat the economy like there is an economic crisis and it needs to admit it and tackle it forthright. Confused statements give the appearance of a rudderless ship. This could be the worst thing for the Pakistani economy. The PTI government might be on the right track, but now a bit more is needed rather than lip service.