There are hopes that the Current Account deficit will be managed and that inflation will remain within limits. The problem areas are the falling tax collection and the COVID related steep expenditures and this could negatively impact the budget deficit. The hope is that the agriculture and services sectors will improve and foreign remittances will continue to increase or at least stay on par. Exports remain in decline even though import restrictions have helped but this is not the answer. CPEC related activity is expected to pick up and the real estate and construction sectors are already on the upsurge because of a timely policy step by the government.
The initial ineptitude in managing the Finance and Tax functions led to high-interest rates, closure of businesses, and an unprecedented devaluation of the Pak Rupee. The parallel economy supporting the real economy suddenly dried up and the economic activity started to gradually come to a grinding halt. The promised Billions from overseas Pakistanis never materialized, and the Prime Minister was forced to ‘ask’ friendly countries to donate to support Pakistan’s tottering economy. His continued tirade against the ‘Elite’ (incidentally most of the PTI stalwarts are part of that same elite) and support for the so-called ‘down-trodden’ led him to come down hard on the investors forcing him to shift gears and move into a donation-asking mode as opposed to a more productive industrialization and investment mode.
China’s most significant outreach to Iran was long in coming but like all strategic decisions by China it is well considered, well timed and calibrated for maximum geo-political impact. This is truly a milestone in regional policy evolution with implications not just for Iran and China but also for Pakistan, Afghanistan, Turkey and the Central Asian states. It creates exploitable opportunities.
Behind the incident is India’s drooling tail-wagging relationship with the US and anti-China statements on many issues especially CPEC. In the CPEC context India has talked of its ambitions in Azad Kashmir (the part with Pakistan) and Pakistan’s northern Gilgit-Baltistan area. India has also steadily stepped up its cease fire violations along the Line of Control between India and Pakistan. No doubt China took note of India’s attitude as it has a Line of Actual Control with India and its own claim line with an agreement not to change status quo in the area.
Stepping back from the immediate situation it is clear that India’s unilateral action in August last year to change the status of Jammu and Kashmir and Ladakh led to reverberations beyond the India-Pakistan situation because the disputed status of Kashmir has been endorsed in many UN Resolutions. If India thought that by its blatant step it had resolved the Kashmir issue in its favor, then it miscalculated seriously as is evident from the reaction in Kashmir and the brutality unleashed on the Kashmiris including steps to change the demographic reality. The Kashmir situation is not resolved and Indian actions on the LOC and elsewhere will have consequences. Apparently China has not accepted the Indian action to bring Ladakh under New Delhi’s control and India has exacerbated the situation by irresponsible statements about its claim to Azad Kashmir and Gilgit Baltistan in Pakistan.
There are hopes that the Current Account deficit will be managed and that inflation will remain within limits. The problem areas are the falling tax collection and the COVID related steep expenditures and this could negatively impact the budget deficit. The hope is that the agriculture and services sectors will improve and foreign remittances will continue to increase or at least stay on par. Exports remain in decline even though import restrictions have helped but this is not the answer. CPEC related activity is expected to pick up and the real estate and construction sectors are already on the upsurge because of a timely policy step by the government.
The initial ineptitude in managing the Finance and Tax functions led to high-interest rates, closure of businesses, and an unprecedented devaluation of the Pak Rupee. The parallel economy supporting the real economy suddenly dried up and the economic activity started to gradually come to a grinding halt. The promised Billions from overseas Pakistanis never materialized, and the Prime Minister was forced to ‘ask’ friendly countries to donate to support Pakistan’s tottering economy. His continued tirade against the ‘Elite’ (incidentally most of the PTI stalwarts are part of that same elite) and support for the so-called ‘down-trodden’ led him to come down hard on the investors forcing him to shift gears and move into a donation-asking mode as opposed to a more productive industrialization and investment mode.
China’s most significant outreach to Iran was long in coming but like all strategic decisions by China it is well considered, well timed and calibrated for maximum geo-political impact. This is truly a milestone in regional policy evolution with implications not just for Iran and China but also for Pakistan, Afghanistan, Turkey and the Central Asian states. It creates exploitable opportunities.
