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Economics of Pakistan

I have waited a long time to write this headline. This is the time when our (not so) friendly country is looking at economics and not weapons to march into prosperity. While Islamabad is at a financial crossroads the purported windfalls are facing an avalanche of uncertainty, high inflation and IMF. For a change its Politics is all about its Economics

How it all started

It all started with OBOR and CPEC – China exposed Pakistan and its most influential ‘boys’ got the first taste of ‘Capital’.

For decades the men in Khaki has enriched themselves with profits from War against Commies and War against terrorism. The first caused the state to be Islamized and second got the country into a fight with the Islamized sections of itself. All the while the country invested into nuclear weapons and became a major potential ‘broken arrow’ candidate. There was no fixing the Crescent and Star. Or so we thought till the time Beijing saw a potential.

Pakistan’s Balance of Payment defecit

The Chinese ‘imports’ though caused a collapse of balance of Payment and Islamabad was forced to go begging to China, UAE, Saudi Arabia and now to IMF.

IMF remains a tough master of coin

IMF on its part has not been kind to Imran Khan. While it did lend money that Islamabad needed, it did so with stringent conditions.  On May 20, the State Bank of Pakistan hiked its benchmark interest rate by 150bps to 12.25%, from 10.75% previously. The rate hike followed Pakistan’s agreement with the International Monetary Fund on a bailout package on May 12.

The arrangement has already caused the literal devaluation on Pakistani Rupee. The PKR is already trading at 152 to a US Dollar. Just a year back it traded at around 115.

Heavy dependence is already building up the pains from Inflation. IMF is also asking for a hiking up taxation rates.

Its man of street and its Politics time

It seems Imran Khan government will fire anyone that can be painted with a blame for present conditions. On May 23, Pakistan’s Finance Secretary Mohammad Younus Dagha was sacked. Earlier  Tariq Bajwa resigned from the post of governor of Pakistan’s central bank. Before that Finance Minister Asad Umar was sacked amid vital bailout negotiations with the IMF.

None of the changes seem to be working for the man on street, who will invariably find a word of Allah more comforting than those of IMF infidels.

The opposition hounds have already smelled the blood, and they are going after PTI. Going by Pakistan’s history, its only a matter of time when ‘boys’ sacrifice Imran Khan for the ‘greater good’.

Pakistan Needs Business, it needs open borders not close air spaces


All Pakistan needs to do is to utilize more of SAFTA provisions for exports to India and reduce its imports from China. The provisions are already in place Pakistan needs to find a friendly presence in India.

And this is all happening at a time when India-Pakistan almost went to war.

This may be a better chance for firmly establishing that Indo-Pak business is potentially more profitable for Boys than Indo-Pak war. For India to become the power house behind the Pakistan’s economy, timing could not be better.

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