The second wave of the pandemic could not have come at a worse time for Pakistan. The government was feeling good for having controlled the spread of the virus better than most countries in the world, and was poised to use that advantage to capture export markets and enhance foreign exchange inflows, but now there’s already talk of another lockdown that could well push the economy over the edge. And this rather quick journey from one state of mind, a very positive one, to an exactly opposite state of mind must have unsettled the ruling party in Islamabad. Now not only would fresh export markets have to wait for another time, but the government must rush to arrange enough money for another rescue package should the going get really rough.
All this moves restarting the IMF program right to the top of the priority list. So far the prime minister has resisted it because the necessary conditions – increasing electricity prices and introducing another mini budget to raise taxes – seem unacceptable on top of the already uncomfortable levels of inflation. In fact, he’s gone as far as giving electricity tariff concessions to industry in a bid to boost output and hence overall revenue. Now a sudden lockdown can put the brakes on both plans.
There’s little industry will be able to do with the tax concessions if people are forced to stay locked up in their homes. And the government could well be forced to return to the Fund, harsh conditions and all, just in order to stay solvent if nothing else. Pakistan barely made it through the lockdown last time. The government came up with an impressive stimulus package that went around $8 billion, and the central bank chipped in with special loans to businesses so they would not lay off too many of their workers. And it worked very nicely, especially since the smart lockdowns that followed were able to suppress the virus and some, though by no means all, people were able to go back to their jobs.
It will be a very different story should another lockdown be needed. And from the looks of things, one will be needed sooner rather than later. The government is doing what it can by quarantining neighbourhoods that are witnessing unusual spikes but nothing seems to be successful in controlling the rather fast resurgence so far. Ultimately it is up to the people. If they are cautious and observe all SOPs with responsibility, there’s no way this virus cannot be stopped dead in its tracks. But if they don’t, there’s little the government will be able to do. https://dailytimes.com.pk/687717/another-fiscal-squeeze/
Another fiscal squeeze?:edit in Daily Times, Nov 11, 2020
The second wave of the pandemic could not have come at a worse time for Pakistan. The government was feeling good for having controlled the spread of the virus better than most countries in the world, and was poised to use that advantage to capture export markets and enhance foreign exchange inflows, but now there’s already talk of another lockdown that could well push the economy over the edge. And this rather quick journey from one state of mind, a very positive one, to an exactly opposite state of mind must have unsettled the ruling party in Islamabad. Now not only would fresh export markets have to wait for another time, but the government must rush to arrange enough money for another rescue package should the going get really rough.
All this moves restarting the IMF program right to the top of the priority list. So far the prime minister has resisted it because the necessary conditions – increasing electricity prices and introducing another mini budget to raise taxes – seem unacceptable on top of the already uncomfortable levels of inflation. In fact, he’s gone as far as giving electricity tariff concessions to industry in a bid to boost output and hence overall revenue. Now a sudden lockdown can put the brakes on both plans.
There’s little industry will be able to do with the tax concessions if people are forced to stay locked up in their homes. And the government could well be forced to return to the Fund, harsh conditions and all, just in order to stay solvent if nothing else. Pakistan barely made it through the lockdown last time. The government came up with an impressive stimulus package that went around $8 billion, and the central bank chipped in with special loans to businesses so they would not lay off too many of their workers. And it worked very nicely, especially since the smart lockdowns that followed were able to suppress the virus and some, though by no means all, people were able to go back to their jobs.
It will be a very different story should another lockdown be needed. And from the looks of things, one will be needed sooner rather than later. The government is doing what it can by quarantining neighbourhoods that are witnessing unusual spikes but nothing seems to be successful in controlling the rather fast resurgence so far. Ultimately it is up to the people. If they are cautious and observe all SOPs with responsibility, there’s no way this virus cannot be stopped dead in its tracks. But if they don’t, there’s little the government will be able to do. https://dailytimes.com.pk/687717/another-fiscal-squeeze/
Published in Pak Media comment and Pakistan