Fragile economy

This refers to the editorial ‘Economic shocks’ (Mar 11) and the news story ‘Foreigners dumped $269.6mln of debt assets in March’ (Mar 11). Until very recently, the government’s economic team and the State Bank governor were upbeat about the improving economy, rise in reserves and stabilization of the exchange rate. In the 48 hours of Monday/Tuesday (Mar 9 & 10), the rupee lost ground to the dollar with a massive decline of Rs3.20. Independent economists and the media have been voicing concern on the SBP’s over-dependence on ‘hot ‘money’ to bolster up the reserves and portray a semblance of stability that never really existed. The flight of dollars during the last two days, parked in short-term government debt, jolted the currency market but that was expected. Following the rupee weakening, the country’s external debts and liabilities have increased by a whopping Rs350 billion while the imports have become dearer. This may also impact tariffs on electricity and gas. Further outflow of dollars would be devastating.

The nation’s economy is resting on a weak foundation while the flawed policies of the economic managers have been ruefully exposed. Is further evidence needed to corroborate that the economy remains in the ICU and on a slender thread?

Arif Majeed

Karachi