By Irum Saleem
Speculation gaining more credence that Pakistan is on the verge of a debt default.
Where are we heading? Everyone seems clueless.
There are reasons why speculation has persisted, even though Pakistan hasn’t missed or delayed a single debt payment since the financial crisis set in earlier this year. At the moment, a major concern is foreign exchange reserves dropping to a four-year low of $6.7bn as inflows dry up on account of Islamabad-IMF tensions.
The disagreements between Pakistan and the Fund include, but are not limited to, the government’s flood-related expenditure estimates and serious fiscal slippages because of the failure to collect enough tax revenues to meet budgeted targets.
On top of that, a certain narrative is being pushed by the PTI to pressure the coalition government to announce early elections. Before the news conference, PTI chief Imran Khan had already painted a dire picture of the economy while calling for snap elections to pull the nation out of the current crisis. Failure to do so would push us to default, he had warned.
No matter how exaggerated that assertion may be, it is fed by deteriorating economic conditions, especially falling reserves, and the delay in policy-level talks with the IMF for the disbursement of the next loan tranche of $1.2bn.
Even PMLN former finance minister, Miftah Ismail, has been issuing similar warnings of late
The PML-N-led coalition government may indeed have warded off the possibility of a near-term default. However, it continues to face mounting challenges: spiralling inflation, massive devaluation of the rupee, elevated fuel and power prices, and shrinking foreign currency reserves.
Together, these are cause for serious concern. The present crisis results from inconsistent economic policies, the pursuit of flawed priorities that have favoured politically powerful lobbies, and questionable fiscal governance.
Imran Khan blames former army chief Gen Bajwa for these ills of Pakistan. But Bajwa has become a story of the past. Now the politicians need to like without the support of such hidden hands. PAK DESTINY