More Darnomics
No doubt the government worked very hard, as Dar sb implied, to raise Pakistan’s foreign reserves to the all time high figure of $24.5 billion. The finance minister would know better, of course, if any outside funds still parked in our central bank vaults – like the Saudi billion-dollar gift that propped the rupee – are helping hold up reserves as well. It must also feel good to have more than just a few days’ worth of imports in the kitty, not the least because our import basket is constantly expanding. Now, strangely, we even struggle to import some of the crucial inputs for some of our flagship exports – from a continuously shrinking export basket.
And the economy may well have become more stable under PML-N, for which Dar sb is correct in congratulating Nawaz Sharif, yet foreign investors might still not be about to form a beeline anytime soon, as the finance minister would have the prime minister believe. The underlying problems that kept investors away, presumably before PML-N came back for the third time, are still in place. The power crisis is just as grave. Surprisingly, the circular debt – the crux of the problem – was once paid in full, unaudited, then allowed to balloon to even worse levels. No heads rolled; nothing changed. And security has improved, but the odd bomb can still go off anytime, anywhere; something that sends markets nose-diving and investors well away.
Healthy reserves point to an improving economy, no matter how much they are aided by exogenous factors. But with the economy still unable to generate basic income – exports and taxes remain stagnant – the health of the whole economy comes into question. PML-N could not honour promises of improving taxes and exports to jack up revenue. Hence the job market is weak and wages stagnant. That is not the ideal economic situation, no matter how much more a passing government leaves in the foreign reserves.
