Finance Minister Ishaq Dar is a magician to whom even Houdini would bow down in respect. He has had more impact on the Pakistani Rupee than Bernanke has had on the USD or other G10 currencies. An unprecedented reversal in the PKR devoid of any fundamental economic justification is a feat on its own. The FM is effectively trying to strengthen the PKR through the phenomenon of self prophecy; announcing that he will bring it back to 98.00 and daring those ‘exporters’ to sell and get rid of their dollars, he is expecting everyone to go on a dollar selling spree. Mr Dar aced the Behavioral Economics course at Haley College and even the Ivy Leagues are looking at the curriculum.
Arm-twisting of money changers, banks, corporates, clarifications on the USDPKR = 98.00 statement, APTMA dinners, it’s a no holds barred Western in Q Block. The Governor of the SBP is continuing to accept orders from the MoF and being a loyal soldier, after all a plush office and a new bullet proof limousine are enough justification. The IMF is closely watching but things on the reserves look difficult, to say the least. Etisalat, 3G, CSF, ADB, World Bank, IFC, PIA privatization and Eurobond are all expected inflows which will save the Rupee and the country bringing reserves to a staggering $20 billion. Tough chance considering Etisalat has been clear they won’t pay, international markets not really looking for a risk, US arm-twisting on CSF thanks to PTI, and no ‘strategic investor’ for PIA.
The last fortnight of December will be very interesting to monitor. Commercial banks continue to bankroll public sector entities with loans to retire their import bills. The question nobody seems to ask is how and who is going to pay for this misadventure. The answer is simple, people like you and me. While Raiwind will continue to get water and electricity we must prepare for a deadly winter with no gas and an even deadlier summer with no electricity.
A CONCERNED PAKISTANI
Lahore