As the ambiguity of the election steadily wanes and the polity re-amalgamates to form the new government, we see the first signs of constancy in the wake of a tumultuous political climate, further illustrated by a strengthening of the Pak rupee against the dollar.
The PKR gaining around Rs.8 (from Rs. 130 to Rs. 122) against the dollar comes as a heartening change. Economic pundits attribute the weakening of the dollar to many factors relative to its supply-demand cycle in the market; from the dollar inflow from UAE through the amnesty scheme, China further pledging US$2 billion to the economy, restriction of movement of cash from one city to another to deter money laundering, sealing of the Pak-Afghan border impeding dollar smuggling –all of which have lent to an accumulating dollar supply without buyers.
Political pundits allot the drop of dollar price to the end of political uncertainty following the elections, as the selling spree witnessed at the money changers demonstrates the general publics’ confidence in the political transition.
While this hardly means that the new government under Imran Khan is poised to singlehandedly surmount the current economic precipice, what it does imply is that the people are reassured by the political shift from deadlocks and stalemates to active government building and all the hope it inspires. With Imran Khan’s speech highlighting employment generation, anti-corruption drives and reducing expenses, the rosy outlook goes a long way in generating optimism, a sentiment which - if reasonably affirmed- can encourage foreign investors, remittances and be used to introduce palatable tax reforms. With a mammoth task of arranging around $11 billion to fill the external financing gap in the on-going fiscal year, the incoming government faces a grave challenge for its first year in office. Let’s hope that the optimism gains momentum and translates across the new polity into effectual and lasting reforms, breaking away from grandiose rhetoric and quick-fix economic crutches.