The malaise is getting worse

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Should Asad Umar be shown the door?

 

As the poet Mirza Ghalib famously said: Marz bharta hi gaya joon joon dawa ki (the more medicine you administered the malaise got from bad to worse). This sums up the present dismal state of the Pakistani economy.

Only the inscrutable finance minister can see light at the end of the tunnel. Inflation touching 9.4 per cent – the highest in five years and more than twice on year on year basis- there will be few takers who would be willing to share Asad Umar’s optimism.

Just while the finance minister was assuring the markets that the rupee was in equilibrium and investors should be buying stocks rather than dollars, panic hit the foreign currency market. The dollar touched Rs 148 in the open market on Saturday.

Khan is willing to go the extra mile to taunt the political opposition to take to the streets

With dollars disappearing from the market the information minister reacted by announcing a crackdown against dollar hoarding. Obviously, some sort of desperation in the government circles is setting in.

Such cosmetic measures simply cannot thwart market sentiments. Nor can prices be brought down through pedantic price control mechanisms.

Hopefully these are not sure-shot signs of an imminent economic meltdown. Nonetheless it is an extremely worrisome situation just like the post-1998 nuclear blast meltdown when strict economic sanctions were imposed by the west on Pakistan.

Even amongst Khan’s core team there are those who are openly ringing alarm bells. It has even been suggested by some that Asad Umar should be shown the door and replaced by someone who has his feet on the ground.

But then there are those who caution that changing the economic helmsman mid-course might do more harm than good. Few names for his replacement were also suggested. But the prime minister refused to budge and stood firmly behind his finance minister.

Ironically there is a lot in common between Asad Umar and his predecessor Ishaq Dar. Both favourites of their bosses believe in the mantra: my way or the highway.

Ishaq Dar- virtual deputy prime minister- shared Sharif’s penchant for grandiose projects, lower taxation and an overvalued rupee. Asad Umar strongly believes in his boss’s philosophy that the previous government left the economy in tatters and hence according to this perverse logic the present government is absolved of any blame for the economy being in dire straits.

Devastating reports from the IFIs (international financial institutions) making dire predictions about the economy are simply swept under the carpet. According to the Asian Development Bank’s (ADB) latest forecast Pakistan’s economic growth is set to further slump to 3.9 per cent during the current financial year from 5.2 per cent in 2018. The Manila-based bank warned that, “until macroeconomic imbalances are alleviated, the outlook is for slower growth, higher inflation, pressure on the currency and heavy financing needed to maintain even a minimal of foreign exchange reserves.”

Ironically compared to Pakistan, economies of most other South Asian countries are doing much better. A report by a UN Commission puts Pakistan’s GDP growth at 4.2 pc in 2019 and 4 pc in 2020 compared to Bangladesh’s 7.3 pc, India at 7.5 pc with Maldives and Nepal at 6.5 pc in 2019.

After all what is the malaise afflicting the economy? It is axiomatic that structural problems need to be urgently fixed. But even after eight months in power the PTI government refuses to budge from its container politics.

Its oft-repeated rhetoric that malfeasance and rampant corruption of the previous governments- both PML-N and PPP- are to be blamed for all our travails has now become a broken record.

Admittedly corruption is a big scourge ailing Pakistan. But a far bigger problem seems to be misplaced priorities and the endemic incompetence of Khan’s core economic team.

If the predecessor governments were handling the economy well and performing feats of good governance they would not have been voted out. Now literally the buck stops on the prime minister’s watch. It is his government and consequently the country that will have to face the appended consequences of high inflation and a low growth economy.

But the prime minister and his team have the bravado to taunt the opposition instead of getting their priorities right. Khan only on Friday while panic in the market was setting in, addressing a public meeting in Jamrud had the gumption to invite Bilawal Bhutto Zardari and former president Asif Zardari to stage a sit-in against the government in Islamabad, saying their efforts to bring it down will not succeed.

Interestingly the opposition is girding its loins to fish in troubled waters. The PML-N leader Miftah Ismail who succeeded Ishaq Dar as finance minister has announced that his party will support every protest and movement against current economic conditions.

Miftah refuses to acknowledge that so far as the economy was concerned the PML-N is part of the problem rather than the solution. Its government’s misplaced policies are partly responsible for the present mess.

Nevertheless, with the opposition’s back to the wall it is being left with little option but to gang up against the government. Despite the country in dire straits, NAB’s (National Accountability Bureau) quixotic campaign against the opposition leadership continues unabated.

The latest was the raid on Model Town Lahore residence of former chief minister Shehbaz Sharif to arrest his son Hamza Shehbaz who is also the leader of the opposition in the Punjab assembly. Despite the abortive raid NAB sleuths failed to arrest Hamza who virtually like all opposition figures is accused of money laundering and having assets beyond means.

Another much bigger raid was conducted yesterday morning. NAB simply refuses to honour the verdict of Lahore High Court according to which Hamza is to be given a 10 days notice by the accountability watchdog prior to his arrest.

Government functionaries on the one hand brazenly claim that they have nothing to with NAB activities but on the other, implicitly endorse its third-degree methods by going out on a limb to justify them. Obviously in this vitiated atmosphere a stage is being set where a relatively unified opposition will have no option but to take to the streets.

Perhaps it reckons that, rising inflation coupled with rampant unemployment and general disaffection will provide it with the tailwinds it badly needs. Right now, the PML-N ostensibly seems less enthusiastic to join hands with messrs Zardari and Fazl-ur-Rehman.

But Khan too cocky about his support base is willing to go the extra mile to taunt the political opposition to take to the streets. But priorities could quickly change if economic indicators keep on heading south.

The PTI government should not put to test its good luck for too long.