EDITORIAL: A special report by the Pakistan Bureau of Statistics (PBS), which gives a data driven evaluation of the socioeconomic impact of the coronavirus on the wellbeing of the people of Pakistan, is just what the government needs to formulate policy in testing times like the present. Now, thanks to ready and hopefully very reliable data, both fiscal and monetary authorities will be able to know much better just how to tweak their policies to meet the increasing threat from the second wave of the virus. It turns out that about 21 million people, or 37.2 percent of the country’s total workforce of 55.7 million, experienced what the report calls “loss of livelihood” during the first wave. That meant that by the end of June only around 22 percent of them were still earning.
Yet, as Minister for Planning, Development and Special Initiatives Asad Umar explained after meeting PBS officials, the fact that about 85 percent of the people that lost their jobs have started working and earning again since then could be taken as proof of the V-shaped recovery that he was always so sure about. The minister is right in taking credit on behalf of the government for a job well done. But it should not be forgotten that along with the government’s generous stimulus package and its concern for the weakest segments of society, the State Bank of Pakistan’s (SBP’s) role was critical in keeping businesses solvent and retrenchments contained to a large extent. It offered a very valuable financial lifeline, through concessional bank credit, to employers to enable them to meet the worst of the storm without adding too much to the unemployment level. And quite clearly it worked just fine.
But that is not to say that the second wave is also going to be just as straight forward to navigate. There still no telling when it is going to peak, or how much more pressure it is going to put on the healthcare system as well as the economy, and already there are fears that this fiscal’s GDP growth rate might not go beyond 0.5 percent. If such concerns turn out to be true, then a lot of the workers that made up the precious data of the PBS report will surely be pushed out of their jobs once again, and the recovery will not appear V-shaped for very long. In fact, the overall impact might well be worse because a lot of people that were able to ride out the first wave because of their savings might have a lot less left in their bank accounts this time.
It is understandable that the government pretty much exhausted its resources with the first-round stimulus package and the central bank, too, has run out of bullets since then. Still, even if its hands are tied and it cannot arrange a fresh line of concessional credit to keep business afloat at the moment, SBP can and should still extend the grace period for the previous facility. It’s a far better option than just watching helplessly as the entire financial system, the life and blood of income and employment, falls all over itself.
A sudden contraction in the jobs market at this point can push a lot of people into desperation just when it is extremely important to keep a sense of panic from spreading. It’s a good thing that the country has been able to secure approximately $1.7 billion in temporary debt relief from the G20, even though some longtime friends have yet to sign on the dotted line, so there is at least that much more to throw into the system to keep it on its feet for a little longer. Data from PBS should also prove useful for optimal allocation of very limited resources. Hopefully, such steps will buy enough time for the government to get a hold on the situation and, in the best case scenario, arrange timely vaccines for a good part of the population. For now, though, the second wave is clearly a very big concern, not just here but all across the world, and it is bound to have a lasting impact on the socioeconomic wellbeing of the people. That is why both the finance ministry and the SBP are bracing for impact.
Copyright Business Recorder, 2021
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