Some real news
Nothing like a dose of real, hard news to knock the shine right off of some of the finance ministry’s tall, and increasingly disputed, claims. What does it mean, for example, when days after the record foreign reserves ($24b) boast, headlines speak of a 136 percent year-on-year increase in the current account deficit in the first quarter of this fiscal? Also, the current account black hole outstrips the trade deficit by a fairly decent margin, which means a lot more than just imports and exports are being compromised. Not that any of this has raised any alarm in Islamabad, of course.
The world of accounts is more numbers than definitions, otherwise Dar sb would have understood that since the basic definition of the current account also incorporates investment flows. Perhaps that means business inflows is the main problem area. And since — except for the stock market – security, energy and law and order has sent investment collapsing through the floor over the last few years, the least the government can do is admit the need for policy revision. It doesn’t help, of course, that tax and export receipts are already way in the red. But all one hears from the finance ministry is record reserves and successful completion of the IMF program.
For quite a while now remittances have been the only reliable stream of revenue for the government. Taxes are nothing worth writing home about. And exports have stayed more or less the same for decades. Loans get the job done for the incumbent, but are always subject to politics. But remittances have always come like clockwork. Lately, though, the Brent fall that did us a world of good also wrecked some of our best venues for remittances. Earnings in the Gulf have shrunk, which – along with slowdown in Europe, etc – is affecting our cash flow back home. And with the deficit widening, and the election approaching, the economy is suddenly not as easy to sell as a few weeks ago.
