The economy of Pakistan is going through a rough patch and it is quite visible that few of the economic factors are declining but in the same scenario, some are stagnant. This scenario is resulting to be very worrisome as it is leading towards slow economic growth and along with it; an increase in fiscal imbalance which can also be clearly witnessed. Due to this, the government is unable to provide for the needs of the increasing number of population. Analysis’s say that the economic conditions are going to suffer a lot as it will slow down in 2018 and go down to the point it hasn’t in last six years.
Furthermore, the country is facing another unavoidable problem, which is the devaluing of Pakistan rupee. The value of rupee in accordance with US Dollar in December was noted as PKR 105 but kept rising until it rose to PKR 135 in October 2018. Financial experts say that Pakistani rupee might experience 5% devaluation. If counted, this is said to be the fifth devaluation since December.
The government of Pakistan clearly said that going to IMF will be opted as the last option and the country would prefer seeking help from the nations they are friends with, China and Saudi Arabia. The reports tell that Pakistan has finally reached for help to the International Monetary Fund but the rupee is believed to still stay in pressure for a certain period of time. With the increase in the devaluation of rupee, it is expected of the State bank of Pakistan to increase its interest rate (currently 8.5%) in the upcoming monetary policy announcement. On this matter, Suleman Maniya who is head at local brokerage house named Shajar Capital adds his words saying that it is a positive initiative going to IMF as it will most likely remove the concerns that the devaluing of the rupee is bringing and it will also help the government from weakening any further. President of the Karachi Chamber of Commerce and Industry, Junaid Ismail, expressed deep concern regarding the issue saying that the devaluation of rupee effects many major and minor segments of the country. He also said that this predominantly affects those who fall in middle or lower income bracket. Additionally, central bank said they will keep a close check on the foreign-exchange markets and they will be doing their best to ensure the stability in the financial markets. Going to IMF came with a price as the foreign investors have put a pause on their hands after the big news. Thus, going to IMF might have solved one problem, balance-of-payment, temporarily but the economy now dropped to the lowest growth rate it was seen in the last six years.
Moreover, taking a look at the foreign currency reserves we can view that it has dropped in the last days of September 2018 and the thing we need to actually worry about is that this only covers the imports of even less than two months.
TASNEEM AKRAM,
Lahore, December 26.
