Daily Times

With the country effectively in lockdown and everybody, government and the people, taking maximum precautions, the question then arises: what next? Everybody understands the need to stay isolated because the best that can be done till there’s a vaccine is to limit the spread of the virus. But, still, it’s not as if all we have to do is hunker down and wait out the storm. No doubt the lockdown is crucial given that the people simply did not exercise enough voluntary restraint and the number of new cases was rising sharply. But let there be no doubt that it will be successful only so long as the economy has enough in it to support all the financial concessions it will require.

And for the longest time Pakistan’s economy has been one disaster away from default. In fact, had it not been for the latest IMF bailout, the $6 billion Extended Fund Facility, we probably wouldn’t even have needed an exogenous push to fall over the edge. Yet such is the financial drain of the coronavirus that the government has calculated an initial aggregate loss to the tune of $10 billion. Surely the Fund would have to understand this particular predicament and soften some of its terms going forward. Otherwise, even if we survive the virus we might not be able to meet debt payments a few quarters down the road.

So far some of the government’s fiscal measures, appreciated as they are, have left the market a little rattled. The initial rate cut could have been better thought out or it wouldn’t have had to be revised, the decision to lock down wiped almost seven per cent off the market on Tuesday, and slashing fuel prices though always welcome will only do so much when everybody is isolated and there’s neither movement nor production. The way forward, therefore, will be dictated by how strictly everybody adheres to the shut down and how far we’re able to limit the spread of the virus. And since the wheel of the economy will turn very slowly indeed for the duration of the lockdown, compromising daily wagers more than anybody just as the federal government feared all along, this will either succeed or fail quickly; simply because the economy can be held up without any activity for a very short period of time. Nobody doubts the government’s intentions, but it has been a little slow off the mark in terms of preparedness, and also caused much confusion on the matter of lockdown. Going forward, though, it will have to be on the top of its game or risk a bigger disaster just ahead. *