It ought to be something of a concern that coronavirus cases have started increasing once again just as the economy is showing signs of gaining confidence. Two different bits of news reports carried in papers on the same day, one indicating an encouraging uptick in bank lending to businesses and another warning of unmistakable signs of the resurgence of Covid-19 in Pakistan, send very divergent signals and should prompt urgent action on the part of the government. Banks are lending more, especially to medium sized businesses, in light of a very healthy new trend of timely repayment of old loans, which shows that the economy is not just stabilising but also recovering as well as maturing.
But all that could be thrown right out the window if the virus keeps spreading and forces yet another shutdown. That would mean not just all the problems that came the last time, like closure of offices and job losses on an epic scale, but also a very disturbing quantifiable loss of all the economic incentives that have been worked out over the last few months. For what good are complex financial instruments that inject liquidity into the system if, at the end of the day, another lockdown will mean that they can neither be employed profitably nor returned to banks? This is, then, yet another one of those moments when the economy depends on factors entirely unrelated to it.
And since the pandemic will be controlled depending on how seriously people follow safety protocols, and the people are not following the rules very responsibly, the economy literally hangs by a thread at the moment. To its credit, the government especially Planning and Development Minister Asad Umar has been making the right kind of noise to try and force people to be more serious about their own future and that of everybody else. Yet it is the government’s responsibility to show the right kind of results. Therefore it must devise strategies that will work and keep the economy from collapsing once again. The advances in bank credit to the private sector is just what should be happening. It must be protected at all costs. The people will now have to work with the government to make sure Pakistan comes out stronger from the pandemic.