With the entire country in the grip of political chaos, Pakistan is headed towards a formidable economic crisis that would be difficult for the next administration to handle. New data from the Pakistan Bureau of Statistics is not encouraging. It shows that the country’s trade deficit has widened by 70pc to an all-time high of $35.4bn in the nine-month period from July to March, causing the State Bank’s debt-based foreign exchange reserves to deplete to less than two months’ import cover.
This is in spite of the nearly 25pc growth in exports, the impact of which is wiped out by a spike of around 49pc in imports. Trade and external account numbers show that the measures taken by the PTI government and central bank in order to bridge the twin trade and current account deficits in the last five to six months have mostly failed.
Who will fix Pakistan’s deteriorating economy and rising inflation? Will the caretaker government or Shehbaz Sharif’s coalition government end this crisis? History has proved that the caretaker government has always failed to reduce inflation because such governments do not think or make decisions politically. In this particular tenure, tough decisions are made that always put pressure on the people and the economy.
It has often been observed that caretaker government took various measures, including increase in taxes, reduce subsidies on electricity prices and raise interest rates, which further increases inflation. If we talk about the Shehbaz’s government, they will try to improve the economy to some extent so that after one year the people will blame Imran Khan for price hike.
The alleged ‘threat letter’ – received by Imran Khan – stated that there would be an improvement for Pakistan after Imran Khan’s departure and if Imran Khan is removed then trade between Pakistan and US may increase and the International Monetary Fund (IMF) is expected to ease the terms of the loan.
The incoming government can change public opinion by reducing inflation, unemployment and other public issues as the monster of inflation has gone out of control due to the rise in the value of the dollar and the prices of various commodities have gone up.
On the other hand, in Shehbaz Sharif’s tenure, you will see lower interest rates, which will accelerate industrial and commercial activities and create employment opportunities, while increasing productivity will also reduce the cost of goods.
Our economy will run like a stock market that reaches its peak emotionally and this rise is decided by the big players of the market. But players, no matter how big, cannot maintain this trend unless market fundamentals or economic indicators of the economy support growth.
