Fluid economic policies.

THE mounting uncertainties in these turbulent times are keeping many economies including that of Pakistan in a state of flux. Uncertainties may be created in emerging economies by natural disasters, Covid-19, political instability or/and status quo policies embedded and yet losing their relevance in the fastchanging ground realities.

The current uncertain situation in Pakistan was recently underlined by prime minister`s advisor on finance Dr Abdul Hafeez Shaikh.

He said the budget proposals for 2020-21 were subject to adjustments in case the severity of the coronavirus increases and it prolongs. Addressing a post-budget press conference on June 13 the prime minister`s advisor stated that in the contemporary world, things are `managed round the clock..

we have presented a budget like always.

Apparently observing the uncertainties hit new peaks worldwide and after scrutiny ofthe economic literature on the topic, a three-member team of senior State Bank of Pakistan (SBP) economists have developed an economic policy uncertainty index (EPU) for Pakistan. Within the knowledge of the authors, the EPU is the first of its kind in this country.

The EPU captures the impacts on the economy of such events as militancy, political instability, National Accountability Bureau`s accountability of politicians, devastating July 2010 floods, PTl dharna during PML-N`s rule etc.

The researchers believe that the importance of EPU for Pakistan`s large emerging economy with 22 International Monetary Fund (IMF) bailouts and one of the lowest credit-to-GDP ratio in South Asia cannot be understated.

The EPU was developed by joint efforts of acting central bank Chief Economic and Research Advisor M Ali Chaudhary, Lead Economist Farooq Pasha and economist Mohsin Waheed. The last two named are officials of the SBP research department.

The country is also witnessing a great national debate on the federal approach on lockout and its unfathomed implications forthe economy.

`Lives-versus-livelihood trade-off is misleading,` says Dr Mushtaq Khan, Founder, Doctored Papers. He argues that `if the pandemic continues to spread at an alarming rate business will eventually stop operating.

This will undermine the country`s ability to sustain livelihoods. The policy priority should be to contain the pandemic and then revive the economy.

Similarly, critics say that the policymakers have no long-term strategy for pulling the economy out of the current crisis.

Independent analysts feel...