Is Pakistan at the verge of technical default?

This mornings I was alarmed to listen to three rumours: 1) banks are unable to buy foreign exchange for their clients from the inter-bank market, 2) whatever US dollars are still held by the central bank just can’t be used and 3) most probably the PML-N will do, what it did in nineties ‑ freezing of foreign currency accounts of Pakistanis till the time forex starts flowing into Pakistan.

I had brief chat with some of the senior analysts and the conclusion was, “Pakistan is at the verge of technical default”.

The overwhelming consensus was, “It is not because of any weakness of the economy of the country, but due to the inability of the decision makers to make prudent and timely decisions”.

The consensus was, “If the casual attitude of the policy planners is not changed immediately, they will only hasten the default”.

The first and the worst habit of the incumbent government is that it spends more time on blaming the previous government, but does not take into accounts its own acts.

It talks about austerity, but indulges in extravaganzas.

It even fails in listening to what the International Monetary Fund (IMF) and friendly countries (also willing to support Pakistan) are saying.

The coalition partners were too keen to control the reigns, but neither had the plans to take the country out of the crisis.

Someone was indecent but may be right, “They wanted to take their names out of Exit Control List (ECL) as well get immunity to rule the country”.

They neither have the will nor the spine to make difficult decisions.

Raising POL prices and electricity tariffs are the easiest decisions because all their expenses are borne by the government.

Their thinking is still not synchronized with what the IMF is saying.

They have not only failed in containing the twin deficits (budget deficit and current account deficit) which is also proliferating the third deficit – confidence deficit.

Shehbaz Sharif government deprives overseas Pakistani from voting rights

In a highly contemptuous move, the government headed by Shehbaz Sharif has deprived overseas Pakistanis from voting on Thursday. The move simply shows that he and his team has no regard what so ever for those who have been remitting billions of US dollars every month and are the saviors of Pakistan. 

The remittance flows are one of the largest sources of foreign income for Pakistan. These prove to be more stable than capital flows and remained resilient during the coronavirus pandemic.

It is the remittances of overseas Pakistanis that have saved the country from committing default. The amount received from International is paltry around US$2 billion per annum, which alone cannot keep the country afloat.

The National Assembly of Pakistan passed the Elections (Amendment) Bill 2022 on Thursday, which seeks to remove the use of electronic voting machines (EVMs) in general elections as well as disallows overseas Pakistanis from voting.

Parliamentary Affairs Minister Murtaza Javed Abbasi presented the bill that was passed with a majority vote, with only members of the Grand Democratic Alliance opposing it.

Before presenting the bill, Abbasi presented a motion for allowing the bill to be sent directly to the Senate for its approval, bypassing the relevant standing committee. The motion was also passed by the NA with a majority vote.

Speaking about the legislation, Minister Azam Nazeer Tarar said it was of immense significance. He recalled the previous PTI government had made multiple amendments to the Election Act, 2017, including those that allowed the use of EVMs and granted overseas Pakistanis the right to vote in general elections.

He also dispelled the impression that the amendments were aimed at depriving overseas Pakistanis of their right to vote. "Overseas Pakistanis are a precious asset of the country and the government does not believe in snatching their right to vote," he said.

It may be recalled that the remittances from overseas Pakistanis rose to a record high of US$3.1 billion in April, 2022. Remittances crossed US$3 billion for the first time ever. These inflows increased 11.2% MoM and 11.9%YoY basis.

As a result, total remittances in 10 months of this fiscal year rose to US$26.1 billion, 7.6% higher than in the same period in 2020-2021. The figures suggest that Pakistani expatriates sent home more funds to support their families.