- Some direction, please!
Hopefully the prime minister’s pep talk with stock market representatives will soothe market sentiment a little – he did agree to a number of their demands without giving it much thought — but ultimately traders and brokers will have to see something more concrete than mere promises. And unless the government is able to provide some sort of direction regarding the current account mess there can be even more severe trauma in the weeks and months ahead. So far the market remains in free-fall, its 1,900 point drop or so amounting to the worst performance in 67 weeks.
The main reason, quite simply, is ambiguity about the future. For all its promises and efforts, the government is still not able to tell with confidence whether or not it will adopt another IMF program. And, to make matters worse, both Imran Khan and Asad Umer regularly play down the need for the Fund yet their policies reflect text book IMF prescriptions. One can understand the politics of appearing strong with regard to the economy, but when such positions end up hurting the economy itself then something different clearly needs to be done.
There’s one more thing. The government will have to be more transparent when it comes to friendly bailouts. There’s still no official word, for example, regarding the nature of the Saudi help. How much of that money can we really spend? And what deals, exactly, have been reached with the Chinese and Emiratis? Just saying they worked things out will just not do unless details are also presented. Investors never buy such talk and PTI itself would have taken any other government with such a policy to task quite severely. For starters, then, let us know finally about the IMF so the market can dig in its heels with long term direction.