Hostile decisions way out of a financial quagmire.

• Author: Nisar, Ahsan

Byline: AHSAN NISAR

In its 75 years of existence, the year 2022 was the toughest one for Pakistan as its economy lurched from one crisis to another thus bringing it to an unprecedented crossroads. The fight for power and control has created turmoil in the national economy to the extent that it is on verge of default while the government denies the fact, and keeps claiming that it has averted the situation. Even a change in military command could not bring the desired results. Natural catastrophes in the form of floods further added to the misery. It is with this baggage that Pakistan has landed into the year 2023.

With no let-up in economic gloom in sight, the quagmire is expected to continue this year. Supporting administrative measures and ill-advised exchange measures are negatively impacting the foreign inflows thus shrinking whatever fiscal space was available.

The government in an effort to please everybody has ended up pleasing nobody, especially the IMF which matters the most. If the removal of the previous government was inevitable based on the premise of bad governance, the situation has aggravated further during the last nine months. Food inflation is averaging above 30 percent and skyrocketing global commodity prices are making the situation even worse. Surprisingly, the loot and plunder continue unabated by the elite capture which depicts the disease that ails the economy.

Fiscal extravagance, low productivity and exports as well as heavy dependence on foreign debt and imports to support domestic consumption for economic growth are the main reasons why Pakistan is in such a situation. Specific to its geography, it sometimes is embroiled in the whirlwinds of global events (Russia-Ukraine War, US-China standoff) which coupled with internal imbalances make the situation more painful and messy. It seems that the global forces which could not withstand the shocks of the pandemic are trying to impose an 'economic' pandemic over Pakistan so that it could not break the shackles of Stockholm Syndrome.

Pakistan is...