An Uphill Battle Starts (Editorial September 2018)

An Uphill Battle Starts (Editorial September 2018)

After a struggle spanning twenty-two years, Kaptaan has, finally, taken the helm of the ship named Pakistan. He had, in the recent past, made tall claims and lofty promises to turn this country into a Naya Pakistan. Now the time has come to live up to those. His initial announcements after assuming the office of the Prime Minister of Pakistan auspicate well, however, some initial hiccups came no less than a jolt especially for those who had been yearning for a change that Mr Khan has promised to bring about. Controversies related to Punjab Chief Minister’s heavy protocol, PM’s helicopter journeys to and from Bani Gala and Khan’s selection of team as the federal cabinet have raised many eyebrows. Although many independent analysts believe that these are just teething problems of the new government, yet there are no two opinions that their repetition must be avoided. Instead of these trivialities, drawing up of robust policies to adequately tackle the looming challenges must be the prime focus of the government.

The first formidable challenge is to revamp the economy of Pakistan – it is in tatters and needs urgent measures. At present, the country is faced with a widening budget and current account deficit. The International Monetary Fund (IMF) had already warned that “[i]n the absence of strong consolidation measures, the fiscal deficit is expected to remain close to 6pc of GDP in the medium term, resulting in elevated debt levels.” The Fund also projected that Pakistan’s external debt and liabilities could peak to $144 billion in the next five years from $93 billion in fiscal 2018.

The country’s forex reserves are also declining and as per the latest data released by the State Bank of Pakistan, they stood at at $10,349.7 million on July 27. But, they are still insufficient to meet the projected financing gap for the ongoing fiscal year. There, still, are concerns about the country’s ability to finance a hefty import bill and meet debt obligations in coming months. According to eminent economist Dr Ashfaque Hassan Khan, Pakistan will soon have to go to the IMF to obtain a $10 to $15 billion bailout package to stabilize the external sector.

While briefing the Prime Minister on the current economic situation, the Finance Minister Asad Umar informed him also about the possible options to enhance revenue, control expenditures and meet external financing needs, as well as to avoid going to the IMF. As per media reports, one key option in this regard revolves around getting oil on deferred payments from Saudi Arabia and Kuwait that could give a relief of up to US$ 6 billion. It seems a pragmatic solution as by doing so, besides utilizing a $4.5-billion oil-financing facility activated by the Islamic Development Bank, we may not need a bailout by the IMF, the global lender that is under enormous clout of the United States with which Pakistan’s relations, at present, are in a downward spiral. A manifestation of this was an out-of-the-blue warning by US Secretary of State Mike Pompeo who said, “There’s no rationale for IMF tax dollars, and associated with that American dollars that are part of the IMF funding, for those to go to bail out Chinese bondholders or China itself.”

Secretary Pompeo’s warning highlights another tough challenge for the new government, i.e. the foreign policy. There is no blinking at the fact that our national economy, too, is dependent on our foreign policy. A strong and effective foreign policy helps a country in having good trade relations with other nations and due to this a large number of people of that country have the opportunity to go abroad and earn money. For Pakistan, these workers, also called overseas Pakistanis, are very important as their remittances form a major chunk of country’s income. For instance, during the first seven months of the ongoing fiscal year, i.e. July 2017 to January 2018, they remitted $11.383 billion to Pakistan.

Nonetheless, the current situation in the foreign policy realm is worrisome, to say the least. First major, and probably the most urgent, issue is to get Pakistan out of Financial Action Task Force grey list. In August, a six-member delegation of the Asia Pacific Group (APG) of Financial Action Task Force (FATF) paid a follow-up visit to Pakistan. Press reports of the visit highlighted that the delegation handed over 14 major concerns to Pakistani authorities. Another delegation is expected to evaluate performance in October and finally in January 2019 when the decision to put, or not to put, Pakistan on the black list will be made. Encouragingly, however, the European Union’s ambassador to Pakistan Jean-Francois Cautain, has already assured Imran Khan that the EU was ready to help Pakistan get out of FATF grey list. But, as World Bank’s country director has advised, Pakistan would need to take a decisive action in the coming months.

For economic progress and internal reforms, Pakistan needs peace and international cooperation. Amidst an ever-changing global scenario and formation of new regional alliances around the world, we should also focus on our region. Improving ties with our neighbours like India, Afghanistan and Iran, and further consolidating our all-weather friendship with China, as well as making headways in Pakistan-Russia relations, should be among the top priorities of the government. Effective use of regional forums like SAARC, SCO, ECO and could be instrumental in this regard. But, Pakistan must not be apologetic and should talk to other countries keeping only the national interest supreme.

In the words of Ikram Sehgal, “Challenges are only a means of achieving goals, an opportunity for renewal and change for those who have the capability, competence and will to meet the challenges head on. Imran and the PTI will have to prove themselves worthy of the trust the voters of Pakistan have put in them.”May Allah bless Pakistan with a bright and prosperous future!

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