Endgame?
LIKE the hapless king on a chessboard, our president flees from square to square, only to find himself being checked at each step. The queen is gone, the rooks fallen, the bishops imprisoned, the knights deserted, and the pawns either captured or hiding. He is supposed to be important, to hold real power, yet once exposed, he remains at the mercy of his more powerful opponents. But the head of state — however titular his position — also cannot be absolved of his repeated failure to assert himself due to conditions imposed on him by his opponents. The Constitution empowered President Arif Alvi to announce the date for a general election to the National Assembly, given that it was dissolved by his hand. He has consciously chosen not to exercise that power and cede it, in part, to his opponents instead. Just as was seen in the half-hearted attempt to scuttle recent amendments to the Army Act and Official Secrets Act, this attempt to wriggle out of a constitutional responsibility solves nothing and has only created further confusion.
The president’s recent letter to the ECP would impress even the most accomplished soothsayer. There is enough in it for it to be interpreted according to each individual’s need, while it actually remains devoid of any real substance. The date that has been given is referential rather than prescriptive. The president does not seem to agree with the assertion that only the ECP can announce an election date, but neither has he disagreed with it in clear terms. Instead, the onus has once again been placed on the country’s top court to decide whether or not the Constitution says what it appears to say. Despite the sustained criticism of our leadership’s worrying tendency to drag every dispute before the Supreme Court — a practice that has led to growing instability due to the judicialisation of politics — none of the stakeholders seem willing to sit down and negotiate a path forward. It must also be said that the judiciary, too, has failed to assert its authority, which has allowed for court orders to be seen as ‘negotiable’ rather than imperative. With the change of guard at the Supreme Court, a new era will begin. Will the new chief justice chart a firmer course forward or allow the uncertainty to prevail? We will soon find out.
Published in Dawn, September 15th, 2023
Monetary policy
DEFYING market expectations of a 100-300 bps hike in the interest rates, the State Bank has again left its key policy rate unchanged at 22pc.
In support of its decision, the bank cites a declining trend in inflation from its peak of 38pc in May to 27.4pc last month, despite the recent surge in global oil prices that are being passed on to consumers.
Therefore, it maintains that the “real interest rates continue to remain in positive territory on a forward-looking basis”.
The bank is also hopeful that “expected ease in supply constraints owing to improved agriculture output” and the pick-up in high-frequency indicators like the sale of petroleum products, cement and fertilisers, as well as recent administrative actions against speculative activity in the forex and commodity markets will support the outlook.
The SBP dispels concerns over the recent resurgence of the current account deficit of over $800m in July, after posting a surplus for the previous four months, saying it is largely in line with the earlier full-year projection that took into account import growth.
It underscores continued monitoring of the risks to the inflation outlook, and taking appropriate actions to achieve the objective of price stability if required.
At the same time, it urges the government to maintain a prudent fiscal stance to keep aggregate demand in check, “to bring inflation down on a sustainable basis and to attain the medium-term target of 5-7pc by end of fiscal 2025”.
Why is the rate to remain unchanged after it was increased in June to meet a key goal for securing IMF funds?
Any other central bank would have raised the interest rates in view of the consistently elevated inflation, continuous exchange rate depreciation, and falling forex reserves over huge debt payments and weakening capital inflows. But the bank’s reluctance is understandable.
Previous hikes in rates to a multi-decade high of 22pc haven’t helped increase savings, or check consumer spending and inflation. The price rise is faster than rate hikes; the national savings rate is falling; and the government continues to accumulate debt to meet its inelastic expenditure.
Monetary policy as an instrument to check the price hike has lost its effectiveness in the current economic structure and existing political uncertainty.
For the last several years, headline prices in Pakistan are being influenced primarily by cost-pushed administered adjustments of domestic fuel and power prices, with the demand pull coming from the government that remains the largest bank borrower.
Expecting a tighter monetary policy to tame soaring prices is useless without a drastic change in the reckless fiscal behaviour of the government.
Only fiscally responsible behaviour by the rulers can make it easier for the SBP to effectively apply monetary policy tools and check other inflation-producing factors for price stability.
Published in Dawn, September 15th, 2023
Stray bullets
ONCE again, Karachi is mourning. A tale not unfamiliar, but heart-wrenching and unacceptable all the same. A young life, full of potential, cut tragically short. Mariam Saqib is but the latest victim of a menace that has haunted our society for far too long: stray bullets. A security guard, aiming to deter robbers, inadvertently sealed the fate of the seven-year-old girl. We have been there before, with the strikingly similar and equally tragic loss in 2018 of 10-year-old Amal Umer, and last year, of a nine-month-old girl whose mother was travelling with her by rickshaw. These harrowing tales build upon a series of incidents where lives are caught in the crossfire of misguided bullets, epitomizing a crisis that has systematically been overlooked.
The culture of firearm misuse is not confined to a section of society; it is a damning indictment of a failure that encompasses private security firms and even the police. We are forced to ask why no lessons have been learned despite the innocent blood staining our streets. How many more young lives must be snuffed out before we stand up as a society and demand change? It is incumbent upon us to advocate for rigorous training and regulation of all security personnel — an initiative that not only includes adept firearm handling but also instils a deep understanding of the sanctity of life. It is the moral duty of the state to ensure that every security guard and police officer is equipped not just with a weapon but also the wisdom to wield it responsibly. Let us not allow another life to be reduced to a mere statistic in this gruesome tale. It is high time we put an end to such needless deaths and nurtured a society where our children can step outside without fear, and where families are not torn apart by stray projectiles emanating from the guns of those entrusted with their protection.
Published in Dawn, September 16th, 2023