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Tuesday October 04, 2022

Risk perception

September 22, 2022

LAHORE: Perception plays an important role in the economy, and the movements in the capital and currency markets that are dependent on the market players. This is the domain where the government has no say and only the private sector dictates the course.

The private sector perceives the state of the economy on the basis of government stability, macroeconomic indicators, strength of the regulatory institutions and rule of law. But in many economies, where the governments are weak, and regulators toothless, manipulators jump in to mint money from weaker and small players of the market.

In Pakistan’s case, perception about the economy is not encouraging, but the manipulators have overplayed it to make easy money.

When a country is passing through a lean period, it needs support from all internal forces to show a united face to the world. Unfortunately, polarisation in the society has reached a stage that no policy or step of the government is endorsed.

In such circumstances, the friendly countries and the multilateral creditors adopt a strict stance that makes the government of the day weaker. Pakistan is passing through its worst natural disaster that demands complete national unity and lenient sympathetic stance of the multilateral donors.

Take for instance the case of petroleum prices. Pakistan is committed with the International Monetary Fund (IMF) to increase petroleum levy according to formula. This is the reason that despite the decrease in the global crude oil prices, the government not only retained the benefit of lower rates but forced to increase petroleum rates by Rs1.45.

The prices were kept on hold for four days probably to convince the creditor of last resort to grant a waiver to reduce the miseries of the people. Perhaps the request was refused.

Our friendly countries have linked their re-rolling of existing loans to strict adherence to the IMF policies.

Neither the political forces in Pakistan nor the international community realises the extent of human disaster caused by the floods. There are 40 million people whose residences and belongings have been wiped away by the floods.

There are 65,000 pregnant women who give birth to 2,500 children daily in submerged water without privacy and medical care. Standing crops on 8.5 million acres have vanished. Over a million cattle have died.

This devastation is beyond Pakistan’s capability even if the economy was stable and growing. World and the local leadership should act now as with each passing day, the infectious diseases would increase and human life would remain at risk. This is no time for lip service.

The government resources have been exhausted as it has even diverted the development funds towards relief measures.

We need medical and paramedical personnel in large numbers. There is already an acute shortage of doctors and nurses in Pakistan.

Foreign doctors and para medical staff must come to our aid. The floods were caused by climate change in which Pakistan’s contribution is minute.

The developed economies are responsible for this havoc, and it is their duty to compensate Pakistan for the sin they have been committing for years.

This is also time for the speculators and manipulators to think of the misery Pakistan is passing through. Please stop playing with the economy of the country.

It is time to share their ill-gotten wealth with those who are fighting for life. The regulators must put their act together and start regulating the economy prudently to save the country from sinking further.

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