Alarm bells

This refers to the news item ‘Stringent steps planned to avert looming BOP crisis’ (Sep 7). The balance of payment (BOP) crisis is man-made and avoidable. The nation faces economic challenges, and the authorities concerned need to devise a robust business model suited to a debt-ridden country like Pakistan. It seems that reckless and thoughtless economic, fiscal and monetary policies that create a crisis are experimented; then an alarm bell is sounded and belated counter-measures debated after the crisis has overtaken the economy. Imports have surged since December 2020 but no steps were taken to reduce the entry of luxury and non-essential finished goods, which account for a sizable chunk of our import bill, into the country. Exchange rate depreciation is a flawed measure to control the import bill. It has also not helped in increasing exports, which remain stagnant at around $2 billion per month. Consequently, the trade deficit has ballooned. On the other hand, a weaker rupee has made the import of food, raw material and capital goods costlier, besides causing an unprecedented rise in external debt burden.

The government must consider bringing in highly qualified and experienced economists to avert a BOP crisis. The only beneficiaries of the crisis are banks, making fabulous profits owing to the government’s huge reliance on borrowings. The government should announce an import emergency, allowing the import of essential items only.

Arif Majeed

Karachi