Economic Crisis.

As predicted, the Pakistani rupee dove to a historic low against the US dollar-now valued at Rs.255.4-after the exchange cap was lifted due to pressure from the International Monetary Fund (IMF). The good news is that this brings renewed hopes about the completion of the ninth review of the Extended Fund Facility (EFF) but the economic future of the country is still in danger. What comes ahead is extreme uncertainty due to expected stagflation, unemployment, low exports and decreased economic growth.

The decision to put an artificial cap on the rupee was expected to be disastrous from the get go and the trajectory our economy took exemplifies exactly that; exports dwindled, values of remittances reduced, as did foreign investment and dollars dried up from the market. With the dollar valued at Rs.255.4, our foreign exchange reserves which were already at an all-time low of $3.5 billion will shrink further, prompting a severe crisis that may finally push us towards default. We may be one step closer to negotiations on the ninth review of the IMF deal but there is still a long way to go if we are to regain some semblance of economic normalcy.

Perhaps one of our biggest mistakes lies in fostering a close-knit relation between economics and politics. At a time when the IMF was pushing for fiscal reforms, the...