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There are now increasing discussions on economic and financial emergency and the different options that need to be taken into consideration to slow the economy down. It seems the government is turning deaf ears on taking the necessary steps to puts rein on the situation, many of which have been advocated in this space for more than six months. The government is stuck.

It appears that different circles in government or ruling party are not comprehending the gravity of the situation. The problem is not going to be resolved by merely bringing the current account into balance or in surplus. The issue of debt profiling needs to be resolved through restructuring. The problem is too much debt of short-term nature. Within the short-term debt, no commercial lender is ready to roll-over. This has to be fixed.

However, the finance minister is living in his own world. He is bullying the IMF, as if he has a solid backup plan in the absence of the IMF. He cares about the political capital of PML-N. Many parliamentarians of the ruling party still think that Dar would be able to do his magic. They still think that within six months the economy would be in batter shape to go into elections. And that is why they are content with how Dar is dealing with the economy.

The first thing that is required today is to get back to the IMF programme. Nothing short of that could work. Even if Dar arranges three billion additional dollars from friends. That won’t be enough. Austerity and belt tightening is required anyways. Without these, no one would be doling out debt.

With every passing week, the anxiety is growing. Some more selective restrictions are being imposed. As a sane mind in the ruling coalition rightly said, Dar is putting the sovereign default on the shoulders of the private sector. The government has not defaulted yet; but a liquidity crisis in the domestic private sector market is getting serious. Nothing is working right.

There is no one in the government with a clear mandate. When PML-N folks are grilled on reforms or on taking tough decisions, they reply that not much can be done in a coalition government. If that is the case, why stay in this coalition government? But no one is ready to leave. And no one is ready to take the right decisions.

Nonetheless, these financial emergency plans should be imposed anyways. Days should be shortened and weeks as well. Wedding functions should be limited and restricted. Foreign travel should only be allowed for education, health and work related. Rest all should be restricted.

But at the same time, fiscal austerity should be implemented. Gas prices must increase. New taxes should be imposed. And expenditure should be curtailed. Nothing is easy politically for the government. But they don’t have any choice either.

Comments

Comments are closed.

AbuBakar Usman Haider Dec 06, 2022 01:42pm
New taxes imposed on existing tax payers while black economy is encouraged. More Hundi, more khaipias, more smuggling. Qabza groups....Documentation of economy must be reversed... Halalkhor tax paying earners must be punished
thumb_up Recommended (0)
M Rafique siddiq Dec 06, 2022 02:07pm
It seems that regime change govt either reduced or stop the advertisement business to this media house. This media house never discussed the continuous rise in essential since this govt is planted.
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Muhammad Yasir Dec 06, 2022 05:25pm
The commodities of life are already way too expensive for a common man in Pakistan to easily afford. How much more rise in gas prices and other commodity prices can the average person withstand? Nobody cares... We see no light at the end of the tunnel and no hope for improvement in the worsening economic conditions. Are we really going to default? Does it really mean that a stable political government through early elections could offer hope for betterment? There is much chaos and disappointment...
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Khan Dec 06, 2022 09:45pm
Restaurants and stalls even illegal using energy till late much lightening etc. No sense prevailing to control expenditure. In this connection f.8.2 market may be visited in medinah market
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Abdul Moiz Dec 07, 2022 05:22am
The advice given is really bad for a financial newspaper. Let's alienate international airlines from Pakistan, let's impose even more taxes and utility prices, let's restrict wedding functions after they have suffered covid policies. Great way to destroy the economy even further. What the government needs to do is to reduce expenditure and manpower, to open up LOCs for solar and wind power, to immediately implement reforms in the SOE sector, and to digitize government functions.
thumb_up Recommended (0)
Abdulrehman Dec 07, 2022 12:24pm
Govt expenditures should be curtailed too.
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Fatima Dec 07, 2022 12:32pm
@Abdulrehman , yes defence reduced and any non development. Sell off SOEs
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Builder Dec 07, 2022 01:09pm
Last 3 paragraphs are essence of the article. I wonder whether there any sane minds left to understand these. Also, "Dar is putting the sovereign default on the shoulders of the private sector" is scary - I see lots of businesses going bankrupt as a result which would put further burden on GDP.
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Abdulrehman Dec 08, 2022 07:01am
Great
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