Paradigm shift

Political gaming that climaxed this month witnessed the ouster of Imran Khan as the Prime Minister of Pakistan, the vulnerability of the legislature, less than appropriate conduct of the nation’s political leadership and legislators, the test of our judicial system, the neutrality of the establishment and state executives and the behaviour of the print, electronic and social media.

This episode put to test each and every institution of the state and made transparent their strengths and weaknesses. Much can be said on each of these happenings, but, for the moment, suffice it to say that one event unfolding after another that was so well structured and in so short a time is intriguing but not unusual. Let time speak for itself.

What is much out of line and unusual this time is the pivoting of the role of a foreign power in regime change and the politics of the country. These are defining moments for the politics of the country, its economic stability and its sovereignty. Much is at stake and the stakes this time are high.

The economy of the country is the first in line. Political strife has done much damage to the economy of the country in recent weeks and months. Fiscal figures, which were already struggling to hold good, are in the red and threatening.

The rupee is spinning out of control and is losing its strength against foreign currencies. Petroleum and utility prices are unmanageable and expected to escalate, leading to stoke inflation. Above all, the investor’s confidence has taken the worst hit.

March proved to be the worst month for Foreign Direct Investment (FDI) as the country witnessed a net outflow of $ 30.4 million against an inflow of $173.4m in the same period of last year. What is more concerning is the inflows of FDI from China which is almost half of what the country received during the same period of FY21.

The country’s foreign exchange reserves are depleting and have declined to $17.28 billion, including $10.849 billion of SBP (State Bank of Pakistan) and $6.178 billion held by commercial banks. The country needs substantial foreign inflows to replenish the depleting foreign exchange reserves. The obtaining situation once again requires a dash by the Prime Minister to friendly countries for a bailout.

It is quite clear that the institutions and politicians of the country have not fully grasped the sensitivity and vulnerability of the failing economy and its consequences. Ironically, political gaming to them appears to have a clear precedence over the state of the economy.

The newly installed government is struggling to come to grips with the situation amidst appeasement of multiple and diversified coalition partners and a belligerent campaign for early elections that Pakistan Tehrik-e-Insaf (PTI) chairman and former prime minister Imran Khan has unleashed. The uncertainty is likely to escalate rather than simmer down.

Under the given environment and time constraints the best of the best efforts by the incumbent government that is a patchwork of many parties may sustain the economy to limp another few miles. The state of the economy to be anywhere near the level of stability demands unified support of all the institutions of the country, all stakeholders, all political parties and all those who matter. It is wishful thinking but the only one at this point of time to salvage country’s ailing economy.

(The writer is former President, Overseas Investors Chamber of Commerce and Industry)

Copyright Business Recorder, 2022