Default or not?


Whole nation is in the state of great depression and confusion that whether economy of Pakistan is going to default or not. When it comes to the statements of the government officials then it seems like the situation is in their control and economy will survive. But, when it comes to reality then the economy seems to be collapsed soon. Foreign currency reserves are going down with a great speed due to which the mistrust factor between Pakistan and other countries of the world is continuously increasing. This mistrust factor is basically the real threat as when the countries are not in the position of waging the good relations with Pakistan then the shortage of a number of goods is being witnessed. Medicine crisis has already hit the country badly. The stocked medicines will hardly able to accommodate the citizens for next couple of weeks. Same is the case with some other essential products. These all are basically the indicators of the default.
However, the government is showing an artificial satisfaction over the situation of economy. The government’s statements are being levelled as artificial because they are totally antithesis to the indicators of economy in the present situation. Finance Minister Ishaq Dar on Wednesday assured investors at the Pakistan Stock Exchange (PSX) that the country will not default but did admit that the economy was in a “tight position”. In his address, the finance czar said he always believed that Pakistan has a prosperous future and “resilience” in its economy. However, he lamented that it was unfortunate that the country has been brought to a point where it should not be. “It’s been three months since I took charge and we listen every day that there is going to be a default. How will there be a default? There is no chance that Pakistan will default,” the finance minister assured the investors. Dar assured that Pakistan would survive and is managing itself but conceded that the economy was in a “tight position”.
Government’s self-satisfying statements are not the solution of the current crisis. The first thing which should be done at once is that government should consider the sensitivity of the moment incident of chanting the hollow slogans. It should admit the reality that the foreign currency reserves of Pakistan have been decreased to the level that the country would be able to hardly manage the imports for just one more month. The official foreign exchange reserves of the State Bank fell to $6.12 billion by week ended December 16, 2022. Whereas, the import bill of the country for the month of November 2022 was recorded at $5.18 billion, according to Pakistan Bureau of Statistics (PBS). This shows the official foreign exchange reserves of the country have capacity to provide import cover for only 1.2 months.
Economy of Pakistan is standing at the verge of huge devastation. Country has only the reserves which would be able to allow country trading with world just for 1.2 months further. The benchmark foreign exchange reserves of a central bank should be at a level to provide three months import cover. So, this benchmark has also been compromised. But, the government is of the view that economy is not going to default. The need of the hour is to admit the fact and work on saving the country from this crisis. Giving illogical statements regarding economy is not the solution.

Published in Daily Country News, December 29th, 2022.

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