Persistent problems

Thursday, Jan 27, 2022

Pakistan’s external account deficit has become unsustainable and appears to be threatening the nation’s sovereignty. This government is so naive in economic matters that in 2020 when the country’s imports were low due to pandemic-induced slumped demand and low prices of commodities like oil, the PM and some ministers claimed that the current account deficit had turned favourable due to the PTI’s government policies. The external account deficit had been a long-standing problem of Pakistan, and the country has to go to the IMF for some financial aid. IMF-dictated strict financial conditions have not solved the country’s fast depletion of foreign exchange reserves permanently. One of the main reasons for Pakistan’s foreign exchange insufficiency is capital flight which is caused by political and economic uncertainty in the country.

Abrupt and controversial policy changes adversely affect the country’s economic journey and create uncertainty which also scares away foreign direct investment. Our economy has never completely recovered from these uncertainties. We have to seriously address this problem to achieve continuous economic growth and help solve the problem of dwindling foreign exchange reserves. A smooth and continuous period of political stability will help grow the country’s economy. No country in the world, regardless of how rich it is in resources, can achieve real economic progress and stability unless there is political and economic certainty.

Ejaz Ahmad Magoon

London, UK