About the BoP crisis

  • Far from over!

Finance Minister Asad Umar’s demeanor, as he counted his ministry’s achievements during the first 100 days in office, did not give the impression that the Balance of Payments (BoP) crisis is far from over. New SBP figures suggest that the country’s net international reserves are in the negative to the tune of $4 billion; and that too after excluding obligations linked to the IMF. But just the other day the finance minister said, and the prime minister echoed, that the BoP crisis was, indeed, over. Could it be that the government is reading too much into the temporary loan is has secured from Saudi Arabia.

And how responsible is the stance that we will not need to go to the IMF for another two months? Hopefully this does not mean that the government is becoming complacent, since two months is about the full length of the breather that recent friendly loans have bought us. How smart would it be to let this time pass, till we are back to the point of begging again, and then knock at the Funds door in even more desperation? Or maybe secret help from China (and also UAE?) is large enough for Pakistan to weather the storm easily at least in the immediate terms. But even if it is the government isn’t saying much about it.

This sort of confusion and uncertainty is just what the market hates the most. It keeps investors on edge and earnings thin. Nobody really knows, for example, what the magnitude of our immediate liabilities is? How much do we really need to pay back, and to whom, in this or the next fiscal? And just how much – just so everybody has an idea – of it is already in the bag? Imran Khan used to come down very hard on PML-N when it kept things hidden from the public. Now, in power, he should avoid such mistakes. Why not put all the cards on the table so the position of the economy is clearly explained to one and all, especially where we stand on the BoP?