No pain, no gain

Prime Minister Imran Khan looks upbeat to overcome the economic crisis over the short-term after managing the financing gap with the help of friendly countries, but this breathing space, even if fully materialised, cannot sustain longer than six months down the line.It’s good to be surefooted, but Khan must bear in his mind that toadies have the capability to have rulers believe, time and again, that they were doing the right thing and were indispensable for the country, being its true saviours.Whether the rulers will fall prey to the machinations of sycophancy is yet to be judged as it will become crystal clear in the next six month to a year or so, at least.Instead of thumping with joy and slipping into complacency, Pakistan Tehreek-e-Insaf- (PTI) led government will have to resolve underlying structural problems after getting this breathing space. PTI cannot afford to let this respite go to waste once again as nobody knows for how long the friendly countries can be bothered to rescue Pakistan. Every friend, no matter how rich, has their limitations. Thus, the rulers need to put up an effective strategy with an implementation plan to steer the economy out of dire straits.Prime Minister Imran Khan’s government has now decided presenting a mini-budget before the parliament by mid of next month and the economic managers are labelling it as an effort to give economy a direction. Minister for Finance Asad Umar, giving a true diagnosis of the country’s economic ills, said they have been caused by consumption-led growth that is dependent on imported capitals, goods, and services. Without jacking up investments and savings, the growth was fuelled by consumption, thus it could not be sustained for long and eventually led to balance of payment crisis every few years.The diagnosis is correct but the missing link is the inability of the government for coming up with a prescription in the shape of devising and sharing a clear-cut roadmap to bring about a major paradigm shift in the structure of the economy to achieve a turnaround on long-term and sustained basis.Pakistan’s economy is dependent on fuel imports, whose annual bill stands at $16 billion, almost one fourth of its total import bill on per annum basis. Some economists, especially Dr Ashfaque Hassan Khan, are suggesting the government for slapping ban on imports of all luxury items for one year, arguing that if the government banned imports of cell phones, luxury cars, imported cheese, and other food stuff the sky will not come down crashing on anyone and Pakistanis can survive without imports of these luxury items. The government is now preparing a three-year roadmap for envisaging macroeconomic projections, which will be presented before the parliament along with the mini-budget next month. Finance minister is making all-out efforts to convince the media and public at large that the government is not implementing International Monetary Fund (IMF) preconditions by taking corrective measures on the front of economy.The premier was of the view that there was nothing to worry about on the IMF and Financial Action Task Force (FATF) conditions. In a bid to put things in prospective, Khan said he believed that Pakistan was facing a challenging situation, but things were manageable and results had started pouring in on all fronts of the economy.The PM further said uncertainties were over after getting the financial assistance packages from friendly countries, but now discussions were underway for securing the IMF loan. The culmination of wrong policies, he said, had cost the country dearly; however, now they had taken steps to overcome the yawning current account deficit that widened to a staggering $19 billion. The PM was of the view that the FATF conditions were beneficial for Pakistan. “The world has changed and the US State Department gave a figure of $10 billion outflow and if half was stopped we could save a lot,” Khan said.He also mentioned that the smuggling of currency and under-invoicing would be tackled.Despite all of this positive rhetoric and image-polishing, Pakistan requires serious spadework for medium- to long-term and it could only be achieved with continuity and consistency in policies.Although, the government claimed overcoming immediate balance of payment crisis, striking an agreement with the IMF would help restore confidence of multilateral creditors and global markets. It depends upon the economic team as to how successfully they are able to convince the IMF team to get a favourable deal. That said, it cannot be achieved without the help of the important country’s of the world that have a big say in the IMF’s Executive Board as well as management.So the government would have to launch a diplomatic campaign to muster the required support both at the IMF and the FATF fronts. The over confidence might add to the country’s problems. So, more homework is required to put the economy back on the growth trajectory; and as is said, without pain there will be no gain.The writer is a staff member

from The News International - Money Matters http://bit.ly/2TkL5An