Daily Times

According to the State Bank of Pakistan’s (SBP) report published in some of the leading dailies of the country recently, Pakistan’s total liquid foreign reserves stood at $ 16.713 billion. As stated earlier, in May 2018 the monthly import bill of the country jumped to a record $5.8 billion, perhaps the highest in the country’s history. The situation must have become more critical in the following months of the ongoing fiscal year. If that is true then the current foreign exchange reserves would be barely enough to meet the country’s import needs for three months. This gives a clear indication that Pakistan needs to drastically cut down its import needs and sufficiently increase it exports.

In the backdrop of the extremely dismal state of affairs on the economic front, judicious economic planning and audaciously stringent fiscal measures will have to be taken by the incumbent government. The measures that need to be taken will unambiguously be extremely tough and, therefore, unpopular. But do we have a choice? No we don’t. The sword of the Financial Action Task Force (FATAF) is already hanging on our neck. Pakistan has already been ‘grey listed’ by this inter-governmental body established in 1989 by the Ministers of its Member jurisdictions, to promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing etc. It is being said that FATAF is now all geared up to promote Pakistan to the black list. If that happens, the ramifications would unambiguously be very serious for Pakistan. Immediate and concrete measures will have to be taken to effectively address the charges of money laundering and terrorist financing leveled by FATAF against Pakistan, if Pakistan is to save itself from being black listed.

Immediate and concrete measures will have to be taken to effectively address the charges of money laundering and terrorist financing leveled by FATF against Pakistan, if Pakistan is to save itself from being black listed

According to Fitch, a group which is a global leader in financial information services, Pakistan’s PTI-led coalition government will be under instantaneous pressure to arrest the rapid deterioration in external finances and address fiscal challenges, as well as to attract the external funding necessary to meet its financing gap. The new government in Pakistan, it says, has more political capital to take positive though difficult policy actions, but it has a thin majority in the parliament and faces a strong opposition. This could complicate policymaking, the ratings agency conjectured in an assessment of Pakistan’s current fiscal policies.

To add a pinch of salt to the extremely critical economic predicaments of Pakistan, the US President Donald Trump has not lagged behind. He has, for the present, warned the International Monetary Fund (IMF) to desist from bailing out Pakistan from its profound economic problems. In months to come we could perhaps see the US further tightening the noose around Pakistan’s neck by asking the other international donor agencies such as the World Bank, the Asian Development Bank, and others to refrain from  providing any financial support to Pakistan. What should Pakistan then do under the circumstances? Pakistan should particularly seek help from its time-tested friend China to bail it out from its gargantuan economic difficulties. China, as known to the world, has been an all-weather friend of Pakistan. It has always supported and continues to steadfastly support Pakistan particularly in times of tribulations and also otherwise. Seeking help from Saudi Arabia, which too has been a good friend of Pakistan, could also be a strong possibility. The other opulent Muslim countries could also be tapped for assistance that could bail Pakistan out from the current economic quagmire that it is critically stuck in.

The writer is a freelance columnist based in Islamabad

Published in Daily Times, September 1^st 2018.