A SUDDEN and sharp depreciation of the rupee on Tuesday has plunged it to its lowest value against the US dollar. That is unsurprising.

Other than a single person, former finance minister Ishaq Dar, and those in official positions that Mr Dar forced into toeing his line, there has been hardly any independent economist or financial analyst who has argued that an artificially propped-up rupee was either sustainable or wise. The more relevant question, then, is how much closer is the rupee valuation now to its value if allowed to be freely determined by the market.

Adviser to the Prime Minister on Finance Miftah Ismail has tweeted that the “current devaluation is a good thing” and that a pick-up in exports and a slowdown in the rate of growth of imports in February are positive trends. If the February trade figures, a 16.5pc reduction in the trade deficit over January 2018, do go on to become a trend and pressure on the external accounts abates, perhaps Mr Ismail will be vindicated. But that remains to be seen.

Many a finance minister and adviser has claimed before to have put the state’s finances and the country’s economy on a stable, sustainable path — only to be undone by economic reality or external shocks. Perhaps more telling than official claims is that independent analysts continue to cite political concerns in the run-up to a general election as an important factor in the management of the rupee and the economy. So, after several years of counter-economic management by Mr Dar, Prime Minister Shahid Khaqan Abbasi and his economic team will need to prove in the final months of the PML-N government that they are guided by economic reality and not political considerations of the Sharif family and its small coterie of advisers. The issue has become all the more important since the revelations of army chief Gen Qamar Bajwa’s comments on the civilian economic stewardship of the country.

There is some truth on both sides of the civil-military divide on the economy and the role of institutions, but a collapse in civil-military relations could itself become the biggest threat to the economy and the state’s finances. The jolt to the rupee on Tuesday was the latest indicator that the triple threat to the economy remains the external account; the budget deficit, especially circular debt in the power sector and failing, debt-ridden state-owned enterprises; and the wait for China-led imports to deliver economic growth and job creation, as the government has claimed it will. Mr Abbasi and Mr Ismail ought to also consider continuing to reverse the hyper-concentration of power under Mr Dar and allowing institutions such as the State Bank of Pakistan and the Federal Board of Revenue to operate with greater autonomy. Strong institutions are unequivocally and always better for the economy and democracy.

Published in Dawn, March 22nd, 2018