Perfect storm

November 27, 2022

The only good news is that one uncertainty is out of our way. For the first time in the history of the Pakistan Army a Hafiz-e-Quran will be commanding it. For the first time in the history of the Pakistan Army, a sword-of-honour winner will be commanding it.

On the civilian side of things, a perfect storm is brewing. Political polarization is at an all-time high. Then there’s dishonesty, deceit, manipulation, double-dealing and deception almost everywhere. Polarization, incompetence and dishonesty are the real issues but for the past seven months, all our decision-makers have been focused on who will be the chief of army staff (COAS). For the past several months, the focus has been on the on-again, off-again long march. The focus has been on self-hatched anti-American and anti-establishment conspiracies, plots, schemes and intrigues.

A perfect storm is brewing. The real issue is that we desperately need a wholesome $40 billion in the next twelve months. What the SBP has is $7.8 billion-and the IMF, the lender of last resort, is not yet prepared to even sit across the table from us. The real issue is that Pakistan’s five-year Credit Default Swap (CDS) had hit an all-time high of 92 per cent. That does not necessarily mean that Pakistan is about to default on its external debt obligations but it surely means that our access to the international bond market is now shut – at a time when we need billions just to keep ourselves solvent.

A perfect storm is brewing. A full 88 per cent of Pakistani businesses now think that the economy is heading in the wrong direction. Import of petroleum products is down 46 per cent. Fertilizer sales are down 50 per cent. Cement dispatches are down 19 per cent and furnace oil sales are down 37 per cent (read: the economy is contracting at a rapid pace). On top of that, we are heading towards a dangerous currency crisis (read: the SBP has run out of dollars).

A perfect storm is brewing. Every economy in the world is dependent upon its energy sector – and Pakistan’s energy sector is bleeding like never before. The state-run Pakistan State Oil (PSO) – where the liquidity crunch is at an all-time high of Rs890 billion – is technically bankrupt. PSO owes Rs300 billion to Kuwait Petroleum and LNG payments to Qatar. The Central Power Purchase Agency (CPPA) owes PSO Rs147 billion. Pakistan International Airlines (PIA) owes PSO Rs24 billion. K-Electric (KE) owes Rs27 billion to Sui Southern Gas (SSGC). The Hub Power Company (HUBCO) owes PSO Rs25 billion. In effect, the SSGC is technically bankrupt; so is Sui Northern (SNGPL).

In Sri Lanka, a perfect storm began with a massive current account deficit leading to a currency crisis followed by a hefty devaluation and sky-rocketing inflation. Then came fuel shortages, loadshedding, food shortages and a lack of life-saving medicines. Then came a default followed by street protests and then came troop deployments.

A perfect storm is brewing in Pakistan but our top priorities are the appointment of the COAS and the long march. Imagine: the economy is at a breaking point and our politicians are engaged in a ‘war of vengeance till death do us apart’. Why do we expect the outside world to take us seriously? Why do we expect the outside world to throw their dollars at us? Time for all political parties to sit together – and brainstorm. Please.

The writer is a columnist based in Islamabad. He tweets saleemfarrukh and can be reached at: