- Economic priorities
Yet another week passes with the market hemorrhaging day-after-day not because of any inherent problem with the financial system but the government’s paralysis about the bailout. This week, though, the KSE benchmark index touched a nine-month low, dropping 1772 points (4.32pc) after breaking the psychological 40,000 barrier. The market, it seems, is not much impressed by Naya Pakistan. Neither are investors as they make a bee line for the exit door, preferring to park their money in other, more reliable, markets. The problem is the finance minister’s inability to provide any sort of clarity about the money needed to avoid default — $12-15b immediately and a lot more in a few more years.
Asad Omar promised to solve the bailout riddle immediately upon taking office. Yet so far, after all kinds of claims and promises, things have not moved forward at all. The government’s typical excuse, that things were just too bad when it took office, is no longer acceptable. It’s not as if PTI ran for another country’s government. All the while, when it criticised all the ‘bad moves’ of previous governments, did it not understand the situation on the ground at all? Whenever Asad Omar so eloquently tore through PML-N budget documents, was he left completely clueless about remedial measures?
That is not to say, of course, that things are not very, very bad. Both PPP and PML-N governments were obsessed with borrowing, yet they only increased the debt with very little to show for it. And when the country is staring default in the face there is very little elbow room to build a Naya Pakistan. But by remaining in a state of shell shock, and not announcing the way forward, the government is hurting the economy even more. Every week more investors leave the market because the finance ministry is continuously kicking the can down the road. Eventually it will have to accept extremely harsh measures imposed by an IMF bailout program. There’s only so long it can avoid this painful decision.