Finance Concerns


It was only last month when a smug Miftah Ismail, the country’s finance minister, had shouted hurrah over dodging the near-term default. Little did the poor guy know that he would soon be forced to walk through the fire in yet another test of his determination, his grit and his magical abilities to plug holes in a sinking ship. Seeking the rescheduling of debt worth $10 billion owed to the Paris Club and securing a major relief from the IMF in the conditions of its loan programme are heroic steps taken considering how hard we’ve been hurt. But the going is still very, very tough.
In the same breath that Mr Ismail had very ironically echoed his adversary’s catchphrase (absolutely not) with regard to defaulting on debt obligations, he could be heard sighing, “the path to solvency was narrow (before), it has gotten narrower.” Bonds slumping to just half face value and the market is frenzied over speculations of the exchange rate going through the roof! Balance of payment has never been this shambolic while hyperinflation continues to push hundreds, if not thousands, below the poverty line every day. The World Bank is sounding alarms bells over another 15 million falling into abject poverty, thanks to “monsoon on steroids,” but even those managing to juggle household expenses have been brought to their knees.
Amid such drastic times when practicality alone should be allowed to run the ship, an uproar over the likeability of financial decisions appeared to have forced Mr Ismail away from the public eye. It can only be hoped that the ruling PML(N) realises what horrors have already been unleashed on our precious finances by populist subsidies on petroleum and power. There needs to be a difference between creating a breathing space for the masses and allowing the mighty and wealthy to enjoy the tiles even when the kitchen is on fire.
Pakistan cannot pull its legs up in anticipation of a bailout from Saudi Arabia and literally do nothing about its structural weaknesses. Working on the morale of the market and the authority of the FBR, which in turn would steer the tax to GDP ratio in a favourable direction can lead the way to our salvation. Complacency and reliance on the old measures cannot do. Not anymore.