Don’t read too much into it
Moody’s upgrade is definitely cause for happiness – Ishaq Dar will agree to no less – but it is important, on occasion, to avoid our typical kneejerk celebration without understanding the complete picture. Firstly, the move from ‘negative’ to ‘stable’, though hardly a game-changer, is movement for the better nonetheless, so more power to the finance ministry, etc. But since the notch up is ‘primarily based on the country’s external liquidity position’, Moody’s move is not without its usual political connotations.
Granted, foreign exchange reserves have eased considerably in the last few months, and the current account deficit is more under control (that is, if you still believe government statistics), but as much as the 3-D/4-D auctions were beneficial, to place other exogenous avenues of shoring up reserves under the head of prudent economic management would amount to misreading the economy altogether. And since Moody’s, as usual, makes mention of respecting IMF diktat – no matter how much it depresses the real economy – there is little doubt this measure is in fact a political pat on the back.
Such exercises are not new to Pakistan. Remember the post 9/11 euphoria, when Musharraf’s right answer to the “with us or against us” threat resulted in economic as well as political windfall? Pars Club debts were duly rescheduled, IMF and World Bank were suddenly more compliant, and there was additional solvency where not long before there was hardly room to maneuver. But going by IMF orders implies we can expect a wave of privatisations soon, otherwise the largesse will dry sooner than the Sharifs realsie. Also, there might be a few bottlenecks, and it is really not very likely for the partnership to last too long. Part of the IMF demands package includes tax reforms and similar measures. And Mian sb knows well enough that while the middle and working class does not evade taxes, the rich and powerful do, some of whom walk the highest corridors of power in our Islamic Republic.
Will Mian sb have the political will to confront the system that benefits from corruption? And more importantly, will he be able to turn himself, and those closest to him, from exploiting the system to respecting it? Moody’s move doesn’t mean much with the right perspective.
