Daily Times

There, you have it. Just as feared, the Fund bailout program, which was in limbo since before the prime minister suddenly ended his own government, has officially been “virtually paused” as the lender waits for whichever setup emerges to discuss conditions for the remainder of the facility. It’s not going to be easy sailing even if the new administration wants to get things rolling in a hurry, considering how Imran Khan upset the fiscal applecart due to purely politically motivated decisions that played havoc with the national reserves in his last weeks and months in power.

So, not only would the new government face a stiff backlash from the public, because it would simply have to raise fuel and energy prices, it would also have to agree to cut subsidies going forward, which would compromise many things, including the special trade incentives package for exporters that is being worked on at the moment.

This, then, wasn’t the best time for headlines to note that the country’s trade gap widened a good 70 per cent to $35.4 billion in just eight months due to very heavy imports.

Now, the import component of the trade balance would have to be trimmed. But since import duties make for the bulk of this fiscal’s tax revenue so far, it would also mean missing the revenue target and more bad press down the road.

That explains why the business community is up in arms. It’s already worried about the state bank increasing the interest rate further in a few days, and now it must also watch out for the spillover of the political turmoil that has gripped the country.

In a situation where the outgoing government made very unwise decisions that are hurting the current account, the trade balance is deep in the red, the local currency makes fresh historic lows every new day, and the bailout program is officially suspended, there’s not much to look forward to for the administration that is going to take over from here. Pakistan does not have the fiscal depth to meet the economic tsunami that is fast headed its way.

At the very least, it would need to revive the bailout program as soon as possible.

But at the moment it does not even have a formal government, and till the supreme court unties the knot that it took suo motu notice of on Sunday, nothing can move forward. So the sooner a decision comes out of the halls of justice, the better for the country, especially its badly battered economy. *