It is understandable why the prime minister feels the need for “out of the box solutions” for post-virus economic growth, but that is about it and neither he nor his cabinet colleagues are able to figure out just what to do. And that is because of the extraordinary situation caused by the coronavirus pandemic, not any lack of imagination at the finance ministry or the State Bank of Pakistan (SBP). In fact initially both fiscal and monetary responses were pretty front-foot, especially considering the size of the economy and the little fiscal space available to the government. But there’s only so long a poor country like Pakistan can keep throwing money into the market, and similarly there is bound to be a limit to the concessional financing instruments that SBP can force commercial banks to favour clients and businesses with.
Despite all the constraints, though, the fact that the government tried to do what it could to keep businesses from laying off employees is admirable. And the Ehsaas Program was just what the doctor ordered to keep the lowest segments of society from completely collapsing. But, quite naturally, there’s hardly any more innovative ideas to be fond going forward, that is why just about every country has been more or less desperate to open up their economies to whatever extent the virus allows. The sooner people go back to their jobs and there is at least some money circulating in the economy the better for the people as well as the government. But all that is also pretty much hanging in the air because everything could be shut down all over again in an instant if the virus starts spreading uncontrollably. Indeed, that is exactly what is happening in far too many parts of the world right now for anybody to feel too comfortable anywhere.
That, in short, is the dilemma being faced poor countries with large populations like Pakistan. And while of late the federal government has started feeling a little too confident about its handling of the situation, the Sindh chief minister has cautioned, quite wisely, that it is still too early to declare victory in this critical fight. The straight forward thing to do, under the circumstances, would be to take baby steps and try and make sure that they are pointed in the right direction. But such are the conditions that even ensuring something as simple as that would require a fair amount of out of the box thinking.
