Pakistan may have tided over the immediate threat of default and economic crises of the last few years but the country is nowhere close to a “path to stability and growth” as boasted of by Finance Minister Muhammad Aurangzeb.
As an editorial in Dawn pointed out, “it is true that the country no longer faces the economic emergency of a year ago, when it was on the verge of defaulting. In the past 18 months, two consecutive IMF bailouts worth $10bn, including the ongoing funding programme of $7bn, and rollovers of foreign loans of billions of dollars, have helped reduce economic uncertainty and created some semblance of stability. Market sentiments are also upbeat, as reflected at the bourse, which is breaking record after record, and macroeconomic indicators are improving rapidly.”
However, “short- to medium-term growth outlook is bleak: the government does not have a credible economic plan that goes beyond IMF-mandated goals and debt rollovers to drive robust growth without pushing the country into yet another balance-of-payments crisis. Apparently, all except our policymakers can see that the IMF programme is needed but is not enough for recovery and growth.”
Instead the “country needs a comprehensive reform strategy outside the IMF bailout framework to address persisting structural imbalances and pave the way for growth — without triggering another crisis — if it wants to exit the debt trap, alleviate rising poverty, and end soaring unemployment.”
In conclusion the editorial warned that “so long as the government does not realise that it needs to put its own house in order, growth will remain anaemic and the world will be reluctant to help.”
