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Is the government running out of options to deal with the gathering storm on the economic front or it has made it a matter of ego that it would not mend its economic policies for any improvement, come what may?
If 
the statements of the government leaders ranging from Prime Minister Shahid Khaqan Abbasi to finance minister Ishaq and interior minister Ahsan Iqbal, who also happens to be minister for planning, are any guide than one can infer that it is a mixture of both.
Amidst growing criticism of his economic policies, the finance minister broke his silence last week and addressed a press conference to defend his performance.
He tried to downplay the challenges faced by the economy by saying that there is nothing to worry about but he conveniently avoided the critical questions about his strategy to deal with the impending challenges.
In his discourse, Mr Dar, as expected, gave a detailed account of how he salvaged the country from the brink of an economic default in 2013 and then explained the encouraging macroeconomic indicators his economic team managed to achieve over the past four years and so.
He also cited the reports from world media as well as international rating agencies lavishly praising his policies which led to economic “turnaround” in the country.
The minister also mentioned the continuing positive trend in the economic indicators in the first quarter of the current fiscal year claiming that “everything is under control”.
However, he did not have any plausible answer to the critical questions being asked about the emerging short-term challenges being faced by the country.
The most crucial and immediate challenge for the country is the burgeoning current account deficit because of huge trade imbalance.
According to the State Bank of Pakistan, the current account deficit rose to 3.55 billion dollars in the first quarter of fiscal 2017-18 as compared to 1.63 billion dollars for the same period of last fiscal, registering an increase of over 117 percent.
According to the finance minister himself, Pakistan needs 18 billion dollars to meet its external obligations in 20017-18.
With foreign reserves hovering below 14 billion dollars, the question is how the country will meet these obligations in the coming days. There are no responses from the economic managers in this regard. The finance minister took solace in the eight percent rise in exports, which the country registered in the first quarter of the current fiscal.
He credited the 180 billion rupees exports package announced by the deposed prime minister Nawaz Sharif early this year for the increase in the exports in the last quarter, and believed that the sitting prime minister has raised the package with another 67 billion rupees, hoping that it would give a big boost to exports.
However, one wonders whether this trend would sustain and even if it does, whether it would meet most of the external liabilities in the short-term without exerting any pressure on foreign reserves or without resorting to any bailout package from the IMF.
The government also believes that once the China-Pakistan Economic Corridor (CPEC) projects become operational in the coming months, they would help stem the current account deficit. It says that much of the trade imbalance is because of the import of machinery for these projects. The operationalisation of these projects would also generate job opportunities which would help raise economic growth in the country.
It is for this reason that the finance minister maintained that the focus for his government in the coming years would remain on achieving growth target, which for the current fiscal year is set at six percent.
In the most significant move to curb imports, the government recently imposed additional regulatory duties on hundreds of non-essential items which it estimated would reduce import up to two billion dollars. But it is unlikely to make any major impact on the enormous trade imbalance faced by the country.
It is for the third time that the present government is imposing regulatory duties on imports, showing that previous attempts failed to produce desired results, forcing the government to make another attempt.
Another major challenge for the government is the huge circular debt in the power sector. The minister claimed that currently the circular debt stands at 390 billion dollars. However, the government failed to tell the reason for the accumulation of such a big amount over the past four and a half years. It is despite the fact that when the PML-N government had taken the helm in 2013, it had paid the 480 billion rupees of circular debt left by the Pakistan Peoples’ Party (PPP) government, and had claimed it would not let this recur.
In view of these facts, the government has no other option but to return to the International Monetory Fund (IMF) for a bailout package or seek help from wealthy friends if it wanted to keep its foreign reserves from depletion.
Some news reports suggested that some friendly countries are willing to help Pakistan financially to face these challenges but some political conditions are being attached to this assistance.
Another major challenge for the government is the high value of the local currency which many believe is unrealistic. There have been growing calls from the exporters’ community as well as donor community that Pakistan needs to rationalise its currency value in order to spur exports and reduce the current account deficit.
The government has so far resisted these calls and Prime Minister Abbasi has recently ruled out the possibility of any such move, saying that the government would try to boost exports without resorting to this option. But it is not yet clear how would the government attain this objective.
The time is running out for the government to prepare a strategy to deal with the short-term economic challenges. So far we have seen claims but there has been no sign of any tangible strategy to deal with the alarming situation.
With finance minister himself facing serious legal challenges in the country, one wonders if he would be able to lead his team to draw up a strategy to tackle the economic challenges.
The writer is a senior journalist based in Islamabad
