A robust recovery


With the ruling elite finally seeing the sense of snapping out of the collision course, optimism seems to have returned to the Pakistan Stock Exchange.
As the index level touched well above 63,000 points, a robust recovery has added to hopes for upcoming days while investors disregard the staggering deficit in the current account on top of steeper power generation costs in the month of January. Of course, these volatile index gains manage to attract a lot of buck money without giving a fair warning about how easy it is for the fortunes to turn their course. A lot still hinges upon the ability of the newly elected government to seal the deal with the IMF to secure further funding in March.
Keeping in view the rampant uncertainty and the bank reserves not even scoring remotely close to the creditor’s expectations, chatter on the street suggests an even harder bargain awaits Pakistan’s delegation. The caretaker government might have guarded the baton well but it would not only preside over the transfer of charge in the coming weeks. Costly borrowing would be one significant challenge. Data from the State Bank of Pakistan suggested Prime Minister Anwwarul Haq Kakar’s administration borrowed an overwhelming 185 per cent more in the first half of the ongoing financial year than his predecessors. They may claim credit for prudent debt management and no expensive external borrowing in their farewell press releases but the writing on the wall cannot be ignored.
The bleeding needs to be stopped without wasting a single moment but unfortunately, no one appears either trained or holding the right tools for the job. We are routinely told that abstaining from another long trip in the financial ICU is not an option. There seems no other alternative because Pakistan’s foreign exchange reserves are abysmally low, especially when compared to its impending external debt repayments but what few bother to care for is the plight of the common man, who is fast losing the battle to inflation. More austerity measures await the masses if the IMF agrees to take one more chance on the measly finances. Does any political party have a plan to carve out some relief for the needy as they supposedly strive for long-term gains? *