Meanwhile back home

Over the last multifold months, there has been a lot of chest thumping by the government quarters over their awesome accomplishments on the economic front. And while the opposition, au naturel, continues to find faults with these claims, vehemently pointing towards the latter’s failure in curtailing load shedding, undeniably key economic indicators have ameliorated.

Inflation is down spectacularly; the country’s bank accounts are bursting with dollars, in fact are at record levels; the rupee has managed to, by and large, maintain its value; GDP improved with a decline in fiscal deficit; and lending from central banks was cut back; what else could the nation hope for or want? But the sceptics ignoring the obvious, rather incongruously retort that inflation is down because of cheap oil; foreign exchange reserves are engorged with borrowed money; workers remittance is the life support for the rupee; benefit of cheap oil not being passed to the masses improved fiscal health and not borrowing from the central bank has been more costly for the tax payers!

Seriously, there is no pleasing the eternal agitator. Irrespective, the layman was in a fix and utterly unable to conclude who is right and who is wrong; after all it is well neigh impossible for simple beings to determine the truth between two polar synthesise on something even more incomprehensible than rocket science, the economy. In these times of uncertainty, the vast majority, the have-nots, double minded and doubtful of any improvement in their quality of living, were tilted towards the rabble rousers, until the IMF gave the thumbs up to the economy; after all the world’s premier guru on national economies must know better. The standard explanation for the common man continuing to feel the pinch when the economy was blazing towards a boom, was patience, trickling down takes time, sometimes even years. And don’t be bamboozled by the tricksters, trickle up anomaly resulting in increasing income inequalities is a myth!

Lulled into comfort by international experts and rating agencies, and swooning with pride over the international press constantly bellowing praise for Pakistan’s economy, any domestic antithesis was summarily brushed aside as gibberish and biased slander. Kudos to the Government!

In this backdrop, sitting back this lazy Saturday morning with a favourite cup of Java grazing the headlines of the preferred rag, the business section headlines came as a rude shock, and were discombobulating enough to result in arrhythmia; which country were they reporting on? Was it an Indian newspaper spreading fallacious rumours; should never trust them journalists from across the border? Wait, it was probably few years’ old newspaper which inadvertently made its way back to the breakfast table. Unfortunately, none of the above was true; pinching did not work either, not dreaming; there was only one answer, the normally reticent editor had gone insane!

Unable to slide out of reality, the bellicose salvo of bummer headlines were quietly revisited. KSE 100 nose-dives by 700 points on foreign selling. Why are these foreigners selling, have they gone nuts, did they not read that according to Forbes, Pakistan is the next Colombia success story. If China is devaluing their currency their stock market should crash; and if the American Federal Reserve (FED) is going to tighten the monetary policy, whatever that means, why should Pakistan suffer through a further decline in stocks; that is massively unfair? After all the stock market is the barometer of Pakistan’s economy, not of China and not of the USA, and the IMF insists that the domestic economy is doing great. Something is amiss here, hey what is this GDP and how is it calculated in the first place?

SBP perturbed over sharp rise in dollar rate; so why does not the central bank do something about it, like imitating the steps taken when the Rupee was brought down to 98. Wait, apparently the rupees touched 104 in spite of SBP’s additional support to the open market, again whatever that means. What is even more confusing is that the SBP elsewhere calculates the REER around 119; so why is it perturbed at 104 only? Nonetheless, the Government better call up Pakistan’s friends again, and quickly, because for some stupid reason, the envisaged tightening of the monetary policy by the FED around September is expected to further negatively impact Pakistan rupee; go figure!

Textile exports down by 12pc? But did not the government, after zealous efforts, gain the GSP plus status with everybody gung-ho about an increase in exports. Whatever happened and who was responsible? Has the nation been bitten by corruption again? Another headline related to this reports that APTMA is apparently for making industry viable? For those who might not be aware, having not read the news beyond the headline, APTMA is the powerful Textile lobby, which, based on headlines of yesteryears, has been forever cribbing and asking concessions from the government. And no surprise this time either, this time they want eight concessions; probably including free electricity and no taxes. And since, in another headline the finance minister is reported as wanting to increase exports, he is more likely than not to grant the textile barons what they want. But the question is what the most protected industrial sector of Pakistan has been doing for Pakistan for so many decades, when the government has always been bending backwards for the formers demands. Why have exports stagnated for the last so many years and, why is the industry unviable forever?

And now is when things get really mystifying, while the textile association wants the government to agree to their demands, the Cotton Association feels that Government intervention can hurt the cotton economy. Seriously, cotton is a separate economy from textile? And not wanting to be left behind and miss the party, if and when the government caves in to the demands of the other two, the LCCI, Lahore chamber of commerce and industry, is not happy with the government for increasing gas tariff. But if the government does not raise the tariffs or increase taxes or continues to dole out subsidies, than it will need Houdini to control the fiscal deficit, especially with all the road constructions going on. The problem is that these rich and powerful lobbies, similar to the 1% in USA, will probably get their demands at the peril of the common man. Unfortunately, the common man does not have a powerful lobby looking after its interests.

And while everything appears gloomy and jaundiced; somehow a private bank’s profits are happily, for their private owners, increasing. A quick call to a banker friend, which phrase probably qualifies as an oxymoron, partially clarified the hue; the banks are lending to the government, since the central bank cant, and making a killing in the process.

So let’s summarise, according to the news and a layman’s understanding: inflation expected to go up, rupee envisaged to go down, nothing happening on exports and no idea what may or may not happen to the economy and the fiscal deficit.

The solution!? Throw the paper away and smile; the CPEC will take care of everything; after all that is a ubiquitous view amongst the entire elite, baring a handful of lone voices which can be ignored on the premise that the majority has to be right at least once. That is the spirit of a democracy; Somerset Maugham was wrong, if 50 million people say something, it can never be foolish! Going back to sleep an epiphany: someone needs to plan a dharna against the IMF!