There’s something to be said about SBP’s (State Bank of Pakistan) claims that the economy was on the right track before the coronavirus came and brought so many problems with it. Truth be told, there is more than a little sense in the argument that the pandemic actually helped the government hide all that was wrong with the economy and blame everything on the virus and the lockdown. For there was really little to write home about with the economy being reduced to the lowest growth rate in more than five years, highest inflation in ten years, highest unemployment rate in decades, etc, and all this was accomplished in the rather limited time of just about a year and a half. Indeed, if it hadn’t been for the IMF program – which is hardly an achievement since practically every government in the last twenty years has gone for one – the country would have been on the course to default by now.
Still, all that is behind us and what matters now is how this country, just like every other country, survives all the problems triggered by the pandemic. The fiscal and monetary response was adequate enough, given the financial elbow room, but the problem is that the virus doesn’t seem going away anytime soon, so there is no telling just how much aid and relief the economy is going to need. Failure to provide the help it needs will lead to a very quick collapse, of course, which is why some of the foreign aid Pakistan has received recently is very welcome indeed.
Analysts at the IMF now believe that the next year is going to bring some recovery in Pakistan’s economy, which shows general agreement with the way the reopening of the economy is being handled. All that needs to be done now is keep a lid on the number of new cases and deaths so there is no need to re-shut the whole system again, as is happening in different parts of the world especially the United States. Regrettably, there are reports that the government’s version about the curve flattening aren’t exactly true and whatever optimism is being expressed owes to reduced testing, which is reason for very serious concern. That is so because there is absolutely no wisdom in curtailing testing to look good on TV because the virus would still spread and, if anything, make authorities look even worse if there is indeed a sudden surge in infections and deaths. And the recovery wouldn’t last too long either.
