DAYS ahead are tougher. Pakistani economists are projecting severe fallout of Covid-19, engulfing virtually all sectors.
The damage, however, will be more pronounced in the services and industrial sectors than in agriculture. The lockdown has crippled the shadow economy, disturbing the economic matrix and exposing the system to new risks.
In the wake of the five-month grace period granted to Pakistan by the Financial Action Task Force and the flexibility shown by the International Monetary Fund (IMF), experts see the scope for economic diplomacy expanding.
“With proper homework, Pakistan should engage trade/development partners for better deals,” noted an economist. He wants to defer all overseas financial settlements for three months to check the haemorrhaging of foreign exchange reserves to ensure stability in the currency market. The value of the local currency is eroding. From 154 to a dollar, the rupee slid to 168 in the open market within weeks.
Most economists foresee negative GDP growth in the fourth quarter of the current fiscal year, a trend that may persist even after the health threat neutralises. They detested the tendency to propel routine issues to the forefront in this do-or-die moment. “The deadly virus is staring us in the face. We can’t afford to lose focus. If we survive this scourge, there will be plenty of time to settle old scores,” noted a leading Punjab-based economist while hinting at the sugar and wheat scandals.
‘Instead of constantly wailing, why can’t the textile sector start producing the protective gear for health staff?’
For better insight, prompt decisions and effective implementation, parliamentarians can draw on the good work of these economists. “The government needs to heed and deliberate on their advice,” a consultant noted.
The Covid-19 shock has driven many Pakistani economists to test their skills at assessing the economic impact, listing options and projecting what the future might hold. For young outfits such as the Centre for Economic Research in Pakistan and the Institute of Development and Economic Alternatives, manned by generation X and millennial economists, the pandemic shock is probably too overwhelming. The senior lot, however, delved into research to find answers to questions haunting the country.
Dr Nadeem ul Haque, vice chancellor of the Pakistan Institute of Development Economics (Pide), produced a baseline document with projections of sectoral fallouts and suggestions to sail through the rough tide. He mobilised an impressive team, leveraged technology for debate and posted Covid-19 e-book on the internet for the benefit of all who care.
Dr Hafiz Pasha and Dr Shahid Kardar used the macroeconomic model of the Beaconhouse Centre of Policy Research to simulate the Covid-19 impact on key indicators under two sets of assumptions: mild shock and severe shock. Attempts were made to reach out to other leading members of the community to pick their minds on the issue that is expected to alter the world order.
Most people who were contacted concurred with their counterparts and public health experts and called for doing all it took — full or partial lockdown — to beat the spread of Covid-19 before worrying about anything else. Without naming names, they endorsed the Sindh government’s decision of lockdown as opposed to the dillydallying by the federal administration.
They all appreciated the PTI government’s policy thrust to broaden the base of the social security net to provide the poor with relief. But they lamented the lack of attention to the geographical mapping of stocks of essentials to ensure food security.
Based on the assumption that the pandemic has yet to peak, some believe that a selective lockdown of locations where cases are concentrated might work better than a blanket lockdown across urban Pakistan.
They called on the government to persuade the IMF to release the pledged $1.9 billion in place of $1.4bn to dispel the impression that the country has reneged from the agreed path. “It could compromise Pakistan’s position and disrupt the flow of global funds in a desperate situation.”
Talking to Dawn from Lahore, Dr Rashid Amjad, director of the Graduate Institute of Development Studies (GIDS), sounded baffled by the magnitude of the challenge. He thought the army should take the responsibility for the quick disbursal of rations to ward off a bigger tragedy/anarchy. He lamented the lack of initiative by the private sector to swiftly adjust to new demands of the coronavirus-inflicted country. “Instead of constantly wailing, why can’t the textile sector start producing the protective gear for health staff? Why can’t drug firms produce testing kits and basic products or engineering companies make ventilators?” he asked.
Dr Kardar stressed the need for ensuring food security. “It is the prime responsibility of the government to make sure that essential commodities are available at affordable prices across the country when people are already anxious,” he said.
“Every time the private sector is approached, it throws in our face massive incentive packages dished out for trade and industry in other countries. Asking tycoons to share the cost of the crisis with the government is harder when we know that their companies are bleeding and the situation is going to get worse,” a senior officer said.
Dr Ali Cheema said in his comment, “The government should track prices and inventory build-ups of necessities at an administrative unit level (city, tehsil) to assess market disruptions and map the availability of food grain and other necessities that can be made available in places witnessing shortages.”
Dr Ishrat Husain said he was currently focusing on administrative reforms and excused himself from offering comments on the evolving situation.
Published in Dawn, The Business and Finance Weekly, April 13th, 2020