Financial markets love continuity – the “unbroken and consistent existence or operation of something over time”. The collective wisdom of investors at the Pakistan Stock Exchange (PSX) has given General Bajwa’s extension a full thumbs-up. Last week, KSE-100 Index amassed a wholesome 2,585 points with capitalization going up by more than Rs500 billion. Imagine: this is the highest ever weekly increase.
In August 2018, when the PTI government was sworn in, the biggest of all financial challenges was the management of the current account deficit (CAD). In July 2018, a month before the PTI took over the reins of the government, our CAD stood at $2,130 million (for that month alone). The CAD figure for July 2019 has come in at $579 million – a 73 percent improvement over July last year. That means three things: our dollar-based economy is now being brought under control; the pressure on the rupee is not as severe as it was a year ago and our dollar-borrowing requirement has gone down. Double thumbs up.
On the domestic front, the Bajwa doctrine seems to be standing on seven pillars. One, a governance setup where voters exercise their right to vote. Two, a governance setup that is legitimized by free and fair elections. Three, end of politics of loot and plunder. Four, democratic rights to be defended at all cost. Five, no politics at the cost of national institutions. Six, the Pakistani state’s complete monopoly of the legitimate use of physical force over Pakistan’s 796,095 square kilometers of territory (read: extermination of terrorism in all its shapes and forms). Seven, strengthening the federation.
In the east, the Bajwa doctrine faces the treacherous, genocidal, Hindu supremacist Modi (who did catch our foreign policy mandarins napping – and lacking). In the west, according to the Royal United Services Institute (RUSI), a British think-tank, the “Pakistan Army under the ‘Bajwa doctrine’ is biting back hard against threats issued by the American administration.” Then there’s the FATF challenge in Bangkok (September 5) and then in Paris (October 18-23). Yes, world powers also appreciate continuity – the “unbroken and consistent existence or operation of something over time”.
Our internal, rupee-based economy is slowing down faster than I had expected only a few weeks ago and the specter of inflation is rising taller than I had expected only a few months ago. The price of naan going up is bad news. The five real fault-lines in the rupee-based economy are: the Rs1.7 trillion circular debt, Rs1.6 trillion leakages in Public Sector Enterprises (PSEs), trillion-rupee leakages in public procurement projects, $2 billion leakage in the gas sector and the Rs734 billion debt in the government’s commodity operations. These are the five sectors that need wholesale reforms. And, these are the five serious fault-lines where our reform basket is absolutely empty (resulting in the skyrocketing of our debt to Rs40 trillion).
The real good news is the continuity and an element of certainty in policy. To be certain, the new war has an undefined battle-space. The new war is “conducted by a roughly 4:1 ratio of nonmilitary and military measures.” The bad news is that we are not taking our nonmilitary fault-lines seriously. The enemy’s real goal is to weaken our war-waging capability. Before it is too late, let us bring our nonmilitary fault-lines into focus.
The writer is a columnist based in Islamabad.
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