Dawn Editorial 1st November 2023

Monetary policy

THE State Bank’s decision to leave the policy rate unchanged at 22pc the second time in a row is in line with wider market expectations. Most analysts anticipated the continuation of a tighter monetary stance, despite the slight deceleration in inflation, the contraction in money supply growth and improvement in other macro indicators. The decision shows that the monetary authorities have adopted a cautious stance by keeping “the real policy rate significantly positive on a 12-month forward-looking basis” to bring down inflation to the medium-term target of 5pc to 7pc by end FY25, disregarding demands for the early initiation of monetary easing. The central bank concedes that global oil price volatility during the Gaza conflict and increased gas tariffs pose a threat to near-term price stability and the current account, but is hopeful that these risks will be offset by fiscal consolidation, improvement in the availability of key commodities, and alignment of the interbank and open market exchange rates.

No doubt the current account deficit has narrowed, the exchange rate improved, the foreign exchange reserves position stabilised to some extent despite tepid external financing, and fiscal consolidation remains on track. But this recovery remains fragile and is unlikely to last without deep structural fiscal reforms and the realisation of planned external inflows. Recently, Goldman Sachs warned that gains in the rupee, which has been among the world’s top performers in the past two months due to the crackdown on the illegal dollar trade, will be short-lived given its financing risks as Pakistan has only short-term IMF and bilateral financing to support the external balance. The reality is that Pakistan still needs $20.2bn, including rollovers of $12.3bn, to make foreign debt payments in the remaining eight months of the fiscal. Even a small external shock can wipe out the recent small gains quickly. It is, therefore, advisable to stay cautious rather than get swayed by momentary successes.

Published in Dawn, November 1st, 2023


Dark future

REFUSING to budge from the Oct 31 deadline, which ended last night, Pakistan is looking to deport an estimated 1.7m ‘illegal’ Afghan immigrants, along with other undocumented foreigners.

Condemnation, criticism and concern from both within the country and abroad have fallen on deaf ears. What will happen to the millions of Afghans who sought shelter in a country they had come to call home for decades?

They fled hostile conditions back in Afghanistan, where foreign and civil wars, both, were fought over the years, and where a deeply conservative Taliban regime awaits them upon return.

Fears of persecution run rampant among the droves of Afghans who were heartlessly provided less than 30 days to pack up the lives they had built in Pakistan, some over generations. All they have been allowed to take with them is Rs50,000 per family. Among those to have had it the worst, first in their country of origin and until recently, their country of refuge, are the Hazaras.

Major clashes with the Taliban when they first came into power in Afghanistan, drove the ethnic minority out, and here too, they suffered religious persecution, only to be driven out again.

The decision has led to “harassment, assault, and arbitrary detention” of Afghans, according to Human Rights Watch. Even those registered with UNHCR are not immune and must bribe their way out.

The state, in its zeal to safeguard security interests, seems to have overlooked the significant economic ramifications of such an abrupt exit. The contribution of Afghans to various sectors, including agriculture, construction and informal labour markets warrant serious consideration. Many established small businesses contributing to local economies and sent remittances back home.

Their deportation could disrupt these economic flows and harm businesses reliant on their patronage. Afghans over time also invested in real estate.

Their departure might result in a surplus of properties in certain areas, potentially affecting property values and the real estate market. Furthermore, they have played a vital role in cross-border transportation of goods and services.

Their removal could disrupt supply chains and impact the cost of goods, particularly in border regions. The deportation of Afghans will also likely further strain relations with Afghanistan and impact regional connectivity.

While the state may have valid concerns, it must strike a balance between national security and the preservation of economic stability and inclusivity.

Published in Dawn, November 1st, 2023


Cricket drama

MUCH has happened off the field in the last few days and much is expected in the coming days, but at least on the pitch, Pakistan showed no ill effects in the match against Bangladesh yesterday.

After four successive World Cup defeats, the cobwebs were finally dusted off — even as pressure mounted on other fronts, including in the form of some distasteful manoeuvres by the Pakistan Cricket Board.

A convincing seven-wicket victory over Bangladesh in Kolkata has kept alive Pakistan’s faint hopes of reaching the semi-finals. And yet, while the team turned a corner, it would be unrealistic not to expect it to be affected by the events back home.

Pakistan cricket has been nothing short of a circus, with information and disinformation spreading like wildfire, thanks to a plethora of live transmissions. Given the team’s earlier losses in the contest, criticism had been fierce.

The PCB decided to act — issuing a statement to clarify that it had merely supported captain Babar Azam and chief selector Inzamam-ul-Haq, enabling them to pick the team of their choice. It was the sort of statement which exposed the Zaka Ashraf-led cricket board as averse to taking any responsibility.

Public sentiment seems to matter a great deal to Mr Ashraf, who is nearing the end of his term as interim management committee chief. Whether or not he remains PCB chief, depends on the result of the election his committee has to hold.

A good run for Pakistan at the World Cup would have tipped the scales in his favour. Instead, the team’s performances have given rise to claims of a rift between the chairman and captain, with former skipper Rashid Latif alleging that Mr Ashraf was not taking Babar’s calls.

An attempt to refute that went horribly wrong, with Mr Ashraf forwarding a screenshot of a conversation between Babar and PCB chief operating officer Salman Naseer, which was leaked on a private news channel. It raised questions about consent.

These incidents are made particularly cringe-worthy by the fact that the entire drama played out in front of the cricketing world during the sport’s most high-profile event. They raise serious questions about the PCB leadership.

An issue over central contracts, which saw players unpaid for five months due to disagreements, was resolved only a few days ago. The PCB also acted on reports from certain quarters claiming favouritism in team selection, with an alleged link uncovered between Inzamam and an agency representing most of the players.

On the eve of the Bangladesh match, Inzamam resigned from his position but vowed to return if cleared of wrongdoing in an investigation initiated by the PCB. There is a time for everything, but this was certainly not the time for domestic theatre in the midst of the World Cup.

Published in Dawn, November 1st, 2023

November 15, 2023

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