Sustainable economy

The government is taking credit for the improvement in the trade deficit and current account deficit during the July-August period. However, there is little room for complacency and even little reason to be elated by the government’s economic team. The downward trend in the deficits is a temporary phenomenon and is not sustainable going forward. Already, exports during the month of August 2019 have dipped compared with July 2019. Further, owing to Eid, there was better inflow of remittances from overseas Pakistanis. A considerable part of the import compression has emanated from low economic activity in the country. Relatively modest oil prices in the international market have also helped.

To sustain and further enhance the improvement, import of luxury and non-essential items must be drastically curbed. Such import compression is a viable option to curtail the trade gap between imports and exports. If this route is pursued vigorously, Pakistan can end up with a much reduced import bill and can eliminate the current account deficit by the year end, that is June 2020. It can wind up the tortuous IMF programme after one year of implementation instead of completing three years and extricate itself from the harsh conditions imposed on it which have had an adverse bearing on the economy, particularly a hostile business climate, cut in PSDP, high interest rate and bullish dollar.

Arshad M Khawaja

Karachi