Signs to look out for
Dar sb has a point, as always, when he says the economy was “stable” in ’16. If by that he means it more or less stood not far from where it stood the year before, neither deteriorated any nor for that matter improved much, then he is indeed spot on. But he might have noticed, even if he didn’t feel the need to mention, that it’s been a while since the Fund wrapped up the last programme, putting pressure right back on the deficit. It’s not as if tax receipts or export earnings grew any in the “stable” year. That is why there is talk of debt trap all over again in the finance ministry. And that, of course, means official borrowing – including, among other things, for day to day expenditure – is back on the table. If the local press is reliable, it should send chills down Dar sb’s spine that first quarter interest payments this fiscal (Rs414b) well exceeded net revenue (Rs369b).
That is not all. Since the fall of ’14 – dharna days in the federal capital – the present government has been selling the exogenous oil collapse impact as a policy tool of sorts. Now, it seems, that story has run its course. Far away, in Vienna actually in proceedings where the Pakistani economy finds no mention, OPEC ministers finally decided to cut supplies to jack up oil price. Remember, Brent crude futures have surged almost 40pc over the last four months. Our friends the Saudis predict a steady rise all the way through ’17.
That means the cushion that has kept the deficit out of red the last couple of years is as good as gone. How the Sharifs manage that in the year of the great election campaign will play out soon enough. But the signs are clear. The economy is coming under greater pressure than it has been in the last two years. And that is happening, once again, just as the election is drawing near.
