There has been a considerable debate on currency management for a while. The pendulum of currency swung between defending currency to supposedly market based exchange rate in the recent times. The side-effects of both extremes are much clearer in hindsight and this may perhaps be a good time to look at their pros and cons objectively.
Pakistan seems to be suffering from the same syndrome. The obsession and the unwavering trust in multilateral agencies, including IMF, and the traditional foreign bilateral partners, particularly Saudi Arabia in the context of helicopter money, and the bells & whistles attached with the helping-hand ever extended by them in the past, fits the bill perfectly to categorise the situation, as such, in the context.
There has been a considerable debate on currency management for a while. The pendulum of currency swung between defending currency to supposedly market based exchange rate in the recent times. The side-effects of both extremes are much clearer in hindsight and this may perhaps be a good time to look at their pros and cons objectively.
Unlike external account, fiscal management remains in the hands of the government. There’re two main components of fiscal account — taxation involving Federal Board of Revenue (FBR) and non-tax Public Sector Entities (PSEs). Both these components doesn’t require any external support and assistance, as such, and it could all be handled with the political-will and the right policy actions by the government. That’s where the theory of “Big Five” comes handy, whereby the idea is that “top five regulators” and “top five PSEs” shall be made independent and eventually reformed. This will help in addressing the fiscal deficit to a very large extent, and perhaps completely over a period of time.
One would wonder what’s the analogy between devaluation of Pak Rupee, interest rate enhancement and empress market clean-up operation. For one, they all seem to represent the construct of other’s. The other similarity is that they merely provide a temporary respite as they are done without the proper back-up/ structural arrangements.
National Savings has always been part of discussions and debates in drawing rooms and on streets. This is not asurprise given that National Savings touch the lives of almost 1/4th of each Pakistani directly or indirectly.
There has been a recent debate in the newspapers that the accumulation of FX Reserves over the last three years have been achieved through external borrowings. This is a classic example of viewing a glass of water as “half full or half empty”.
There has been a considerable debate on currency management for a while. The pendulum of currency swung between defending currency to supposedly market based exchange rate in the recent times. The side-effects of both extremes are much clearer in hindsight and this may perhaps be a good time to look at their pros and cons objectively.
The impact could be deep and far-reaching on EU and its existence; hence, also on all the trading partners of EU, including Pakistan. There are various dimensions to it – short term versus long term; and after-effects of this decision within and outside Britain and EU, both in terms of economy and on the society as a whole.
