AFTER the extended rout at the Pakistan Stock Exchange over the past few sessions, there are few doubts about how the PDM government’s management of the economy is being viewed on the street.
Since last Friday, the benchmark KSE-100 Index has shed around2,000 points (about 5pc) due to panic triggered by the PTI’s decision to dissolve the KP and Punjab assemblies, as well as speculation that the government has missed the window to conclude negotiations with the IMF for the ninth review of its ongoing bailout programme.
“The situation is bad. Nothing will change until the IMF’s ninth review is completed,” as one market pundit put it. He was describing Tuesday’s carnage, which saw about Rs200bn wiped out from market capitalisation. The situation is, indeed, quite bad and likely to continue to remain so thanks to our political leadership’s inability to act responsibly even when the country is in flames.
Over the past six years, the total value of shares listed on the stock exchange has reportedly declined from about $100bn in 2017 to around $24bn presently. There is a range of factors behind this massive decline, but the bottom line is that anyone who put their money in stocks as a long-term investment would have lost more than three-quarters of its valuein dollar terms over that period.
With returns like these, there is little wonder that so few want to invest in Pakistan. Even after the economy began hurtling towards a precipice some 12 months ago, our economic managers have been unable to do much to avert disaster. Both the PTI and PDM took disastrous measures to protect their politics.
First, fuel and energy prices were frozen in the first half of the year; then, the dollar-rupee exchange rate was unofficially frozen in the second half. The price of both decisions continues to be paid by ordinary people, as whatever wealth they had has evaporated under searing inflation.
While much blame lies with the incumbent finance minister, who has failed to come up with any logical or coherent strategy to bail the economy out, other politicians also deserve to be castigated for the role they have played. Since last year, the PTI and PDM leaderships have demonstrated that they care little for the country’s economic health when their political interests are on the line.
Both factions have indicated a reckless disregard for the consequences of political brinkmanship on the future of the people they claim to lead. As a result, the cycle of instability triggered last year due to the vote of no-confidence has grown progressively worse and a sense of despair now poisons every aspect of life.
How long must the country bear punishment just so the egos of a few powerful people can be satisfied?
Published in Dawn, January 19th, 2023