After enduring months of political chaos on Panamagate issue, the country is heading toward economic crisis due to rising trade deficit, slow industrial output and possible meltdown of, until now, growing stock market. The current account deficit has reached $12.1 billion in the fiscal year 2017, exports are continue to fall and the Pakistani rupee has closed at 108 a dollar, experiencing the biggest drop in recent years. Despite claiming years of experience of administrative affairs, Prime Minister Nawaz Sharif had failed to show any sign of good governance. The coming months are likely to see more chaotic situation as until Shahbaz Sharif is installed, many crisis are ready to snipe this nation. The Pakistan Muslim League-Nawaz took over the rein of the government in smooth transition of power three years ago and it had all the opportunities to put the country to the road of development. Instead, the leaders choose to bank on foreign loans to run the country’s affairs. The total loans on the nation were $40 billion until 2013, but the volume reached $70 billion in 2017. Unfortunately, most of the loans were used in debt servicing or in non-development sectors.
During temporary phase of political stability last year, the economy of Pakistan went on upward trajectory and the world renowned financial experts hailed speedy growth in gross domestic product. The Pakistan stocks were being proclaimed as the top-performing market in Asia. The economy is now heading toward collapse, as the current account deficit have shown a massive increase of 149 percent. Whether he was involved in any wrongdoing or not, but the prime minister has gone and that on corruption charges.The responsibility has now shifted on the shoulders of the government officials. The public office holders are symbolic heads of the government departments and it is the bureaucracy which has to implement the vision of the political leadership. The first priority of the interim prime minister should be to introduce austerity measures and save money. The austerity drive should be launched in a way that it should not disturb the working order of the government departments. In the past, the ill-planned austerity drives brought more troubles and losses to the nation than bringing them any good. A smooth transition of power from interim prime minister to regular prime minister will have positive impact on the economy.
The point to ponder is that, loans and austerity measures will not work until the new leadership prepares itself to face the challenges.