In quest of economic revival.

Byline: Mohiuddin Aazim

BOTH the government and the State Bank of Pakistan (SBP) are trying to spur economic growth by facilitating the wealth-creating class, hoping that the trickle-down impact will ultimately benefit ordinary people.

But the Covid-19 pandemic poses a direct threat to the lives and livelihoods of the poor. So the government has come up with specific plans to help the financially weaker segments of society.

The slashing of the interest rate by the SBP and the government's stimulus package are aimed at ensuring economic recovery in the next fiscal year. For the current fiscal year, the economy is bound to see a recession. The government estimates that GDP can contract 1.57 per cent for the first time in 68 years.

Pakistan has so far managed to secure $3.3 billion-plus external financing from the International Monetary Fund (IMF), Asian Development Bank (ADB) and World Bank. It is expected to get additional financing as and when required. Besides, external debt's rescheduling by creditor countries is also on the cards. International energy prices are at multi-year lows, promising to keep our import bill in check. So, on the external front, Pakistan has some breathing space.

Without ensuring easy movement of labour and materials across cities, exempting the construction industry from lockdowns cannot produce the desired result

This has enabled the PTI government to offer a Rs1.2 trillion package for stimulating economic growth and footing the cost of the war against Covid-19.

The slashing of interest rates by the central bank along with other concessions has come as immediate relief for food and export-oriented industries. They are allowed to work even amidst lockdowns. But there is a caveat. The government has banned food exports for the time being to ensure food security as long as the nation is at war with the pandemic. Meanwhile, all other large-scale manufacturing industries are free to straighten their financial books taking advantage of low interest rates - and build up limited inventories wherever possible. But their sales cannot grow owing to lockdowns and a dip in the people's income level. Even industries like textile that see a surge in sales during Ramazan are laying off employees owing to poor demand. The informal workforce - some 47 million people out of the total 72m - continues to suffer even though provincial and federal governments have expanded social safety nets.

The financial package announced for small...