PAKISTAN is facing yet another economic dilemma. The rupee has been sinking fast against the United States dollar as the country’s foreign exchange reserves are decreasing by the day. If the government increases fuel prices, there will be further and higher inflation, and if it doesn’t, the dollar will keep soaring, which, again, will add to the inflation.
The reserves are sinking to a level of near default because of the widening current account deficit. If Pakistan defaults on international obligations, the flow of imported goods will be disrupted, creating shortage of goods. This might result in unrest in the country.
To add fuel to the fire, the level of political uncertainty in the country has not been witnessed before in national history. The coalition government is not taking the difficult decisions fearing the political cost it might have to pay.
But this inaction is exacerbating uncertainty, resulting in more chaotic conditions. There is economic and political uncertainty in the country, but one thing is certain that inaction is not what we need.
During the last few years, politicians have started playing with country’s economy to win elections. Just before the end of its term going into the 2018 elections, the then government had announced unprecedented and unaffordable income tax concessions to make political gains ahead of the elections.
Likewise, the previous government, just before being ousted, reduced the fuel prices to unrealistically low levels to make political gains in the next elections whenever they are held.
Such tactics are dangerous and tantamount to playing with the country’s economy. So, enough is enough, and now the politicians must stop playing with the country’s economy which needs stability and progress. It is a matter of our survival.
I believe that in the larger interest of the country, the government must take difficult economic decisions immediately. Among other economic reforms, Pakistan needs immediate decisions for structural changes in economic policies to avoid budgetary deficits of all shades and hues.
Ejaz Ahmad Magoon
Published in Dawn, May 25th, 2022