The economy has been receiving quite an ovation in the last few days. First the State Bank applauded how more indicators are moving “in a favourable direction” in its last Monetary Policy Statement. Then Moody’s upgraded the outlook on Pakistan’s credit rating, from positive to stable, pointing towards a strengthened external position, efforts towards fiscal consolidation and steady performance under the IMF programme.

The latest to join the applause is the IMF itself, where the Executive Board issued an upbeat assessment of the government’s “strong performance”. Three major institutional voices, representing diverse sets of interests, have each pointed out that the economy is on the mend through fiscal consolidation and the strengthening of external accounts.

Read: Prudent policies help improve Pakistan’s economy: IMF

The government deserves its share of credit for this.

But it’s also important to remember that each of these voices has its own priorities to safeguard.

For instance, Moody’s has one overriding interest: to determine whether Pakistan can meet its debt service obligations to foreign creditors in the forthcoming year. If that is fine, then all is good.

Also read: Moody’s upgrades Pakistan bond rating

The IMF is similarly mostly interested in strengthening the debt service capacity of the country, with a little bit of focus on structural reforms as a garnish.

The State Bank has lost its voice of late, and a question mark hangs over its own credibility. One voice that is unfortunately absent from the choir is that of the common citizenry of the country. Are people seeing this improvement in the economy through job creation, income growth, stabilising household finances, falling poverty, and so on? Thus far, the naked eye can see the following: investment and business activity is in a slump, but consumption and speculation are charging ahead.

Factories are sputtering but the malls are packed. Investment is down, but the property market is booming. If one listens to the institutional voices mentioned above with a trained ear, one can hear powerful caveats tucked away in their language, for instance, when Moody’s points out – two-thirds of the way down in their statement – that “most of the build-up in official reserves has come from external borrowings”. The government is justified in taking a bow at the end of this round of applause coming from those entrusted with safeguarding the interests of external creditors. But the rest of us are still waiting for our turn to join in. Let’s hope we find reason to do so soon.

Published in Dawn, March 30th, 2015

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