Time to rise

That the country is on economic roller coaster is perhaps an understatement.
The rupee, as I write this, has depreciated significantly, despite the State Bank of Pakistan being extremely cautious in bringing down interest rates. But that is probably not a surprise; even without the current exceptional circumstances, there was always a risk of the rupee depreciating when hot money evaporated at any point for any reason. Today the currency players are perhaps more worried about their principal than gains thereon, and the safest bet presumably is US bond markets, hence no amount of interest can likely stop the outflow of foreign short term debt.
Where will the rupee eventually settle, nobody knows.
And while the trade deficit is likely to improve, or not, those making predictions about where the rupee will end up need to put their money where their mouth is; go all out, with their personal assets, short or long on the rupee - except even then some of us may not agree in such uncertain times.
Business has almost grinded to a halt. Whatever little activity that continues to crawl on, has more to do with essential goods and services. No point in even predicting today where the GDP growth, if at all it grows, will finally settle. All bets are probably off.
Most businesses will see their revenues slashed, and will hence probably not be in a position to pay their debts; NPLs are likely to go up and the banks need to brace themselves for probable bad times. And with decreased revenues, the government is probably not collecting a lot of taxes either. Perhaps, why the government is not in a hurry to bring down petrol prices!
And where is it all going? To be honest, I am clueless.
In the current circumstances, any predictions about the economy are, in two words, utterly useless. Nobody can know and no one can predict. History has no lessons for this kind of a global disaster. The Spanish flu is too far back in history, the world was a lot different back then. And economic theory is another walk down the wrong alley; as is economic theory only works in a fictional world, and definitely not designed for a world reeling from a global catastrophe.
Only when the dust settles, will the impact on economic life become evident.
In any case, unfortunately even, all of the above are not the biggest concern today.
How protracted and how devastating the Virus war will be is the only concern right now, for the entire world. The light at the end of the tunnel; China was able to reverse the tide.
The prayer and hope is that China can transfer the technology for fighting the Corona Virus to the rest of the world, including Pakistan, quickly; and/or big Pharma comes up with a vaccine double quick; and/ or the virus mysteriously disappears as suddenly as it came.
The country is already in a partial lockdown, and perhaps by the time, albeit hopefully not, this article is published major cities may be under curfew.
The capacity of the State and the management skills of the leadership in extreme situation will surely be put to test; our best wishes for them and a big salute for the health services team. Another concern is that if the lockdown continues, people will get desperate and desperation brings out the worst in people. Things may get worse before they get better; definitely a testing time for the writ of the state.
In the interim, the government seems to be on the right track. A focus on ensuring supply of necessities to the masses, managing food supplies, ensuring least disruption in production of necessary goods and supplies and efficient social distancing seems to be the only viable strategy at this stage.
But all the resources of the State will not be enough.
I for one have always maintained that the biggest strength of our economy is and has been private charity, which quietly and efficiently has sustained an economy which otherwise might surely have buckled under long ago- considering how our economic indicators have a tendency to go haywire in the wrong direction most of the times. And this social welfare system based primarily upon private charity today faces its biggest challenge. It needs help.
It is time that our capitalists, the businesses which owe everything to the country, step forward and rise above their profit and loss statements, and join hands with the philanthropists and the charity networks to help them and the government in this battle for survival- all guns blazing.
The survival of wealth is directly linked with the survival of the nation; and this is not the time to measure what the nation asks for, as a percentage of EBITDA. It is payback time.
Time to rise!
(The writer is a chartered accountant based in Islamabad. Email: [email protected]. The views expressed in this article are personal. The views are not necessarily those of the newspaper)