A joint battle
TWO separate events in as many days have spawned hopes of closer coordination between Islamabad and the provinces, as well as the central government and the opposition political parties, in the country’s fight against the rapid spread of the coronavirus infection. On Wednesday, Prime Minister Imran Khan rightly argued that no government could defeat the pandemic on its own. There was also little room for disagreement with him when he told a conference of parliamentary leaders of various political parties via video link that the war against the deadly virus had to be won collectively as a nation. Although he stuck to his previous stand that Pakistan could not afford to impose curfew as an extreme social-distancing measure because of its potentially adverse impact on the poor and those workers whose livelihood depends on daily wages, he indicated his willingness to discuss every suggestion that the opposition political parties would want to put on the table to successfully fight off the disease and minimise its impact on the nation’s economy. This was a departure from the past, although the prime minister’s all too brief appearance caused consternation among opposition leaders. Mr Khan also said he planned to discuss his reservations regarding the impact of the shutdown and the suspension of intercity transport by the provinces on the economy and the poor segments of the population at a National Coordination Committee meeting today. One hopes that the meeting helps bridge the differences between the centre and provinces over a lockdown strategy to control the spread of the infection and improves coordination between them.
The other related development was the organisation of a multiparty conference held a day earlier at the call of the PPP. It was indeed a step forward in the efforts being made to bring all political forces together in the country’s war against the deadly virus that has already infected over 1,000 people in the country besides killing reportedly eight people. Additionally, the virus has imposed massive costs on an already struggling economy and jobs. The moot called for devising a national action plan with mutual consultation so that all political forces could jointly fight the battle against the coronavirus.
The participation of the political allies of the ruling PTI in the conference showed the extent to which politicians of all hues are missing a mechanism that could ensure coordination and facilitate the exchange of proposals between the ruling party and the opposition. The need for a political consensus to deal with the Covid-19 challenge cannot be overstated in the present situation. If there is a time to rise above political differences and parochial divisions, it is now. Pakistan like the rest of the world is in a state of war. And no politically divided nation has ever emerged victorious from a crisis, even of a much smaller magnitude than the present one.
Interest rate cut
IN an extraordinary development, the State Bank of Pakistan announced a large cut in the discount rate equal to 1.5 percentage points. This happened in an unscheduled meeting of the monetary policy committee that was called at short notice and deliberated while the prime minister and his team in Islamabad announced the details of the trillion-rupee-plus stimulus package. It was, by all accounts, an extraordinary day, with the government coming up with a mid-year stimulus package of unprecedented size together with the central bank announcing a rate cut, which, if coupled with the previous 75bps cut a week earlier, amounts to 2.25 percentage points, probably the single largest cut in over a decade. With both these announcements, the stabilisation that began under the auspices of the IMF programme now stands terminated and the government’s hand has been forced to move towards supporting growth.
Extraordinary times call for extraordinary measures. Now that the decision to move towards stimulus has been made in so comprehensive a manner, the next thing to look out for is stimulus-induced instability. An example would be the exchange rate where the effects of the rate cut have been felt right away as the rupee fell by Rs2.6 to the dollar in the interbank market the very next day. The finance team may well have placed the bet that with oil prices crashing and a large deflation about to sweep the economy with collapsing demand, there is ample room to resort to extraordinary steps like steep rate cuts and ramped-up spending. There is no reason to fault them for having made this judgement call, because these are, after all, extraordinary times. But having made the judgement call, they must now show some fortitude in the face of the market reactions that will inevitably come. The finance team, now led by the finance adviser and the State Bank governor, must make their government colleagues aware of the risks of the moves that are being made, and ensure that the authorities do not panic if the market sees sharp swings in the coming days. These swings will be there wherever the market is still operational, stock trading and the exchange rate being key. Demands for shoring up the exchange rate must now be managed, and those for a stock market bailout fund, which are sure to come at some point, must be fended off comprehensively.
Tokyo Olympics postponed
THE expected yet abrupt postponement of the 2020 Tokyo Olympic Games due to the coronavirus pandemic has left the world of sport in a state of severe disappointment. Though calls for postponement of the Games from various quarters had grown louder over the past two weeks, sports federations and athletes around the world continued to train for the mega-event and the International Olympic Committee, while host Japan rebuffed such demands, simply because too much was at stake. However, the rapid escalation of coronavirus cases across the world compelled the IOC and Japanese Prime Minister Shinzo Abe to review their stance and they subsequently postponed the Games on Tuesday. The IOC has said the Games will be held no later than the summer of 2021 and will still be called the 2020 Tokyo Olympics.
Apart from the period of the two World Wars that witnessed the cancellation of three Olympic Games — in 1916, 1940 and 1944 — this is the first time that the event has been postponed. Of course, no one is happy about the decision, since rescheduling the Olympic Games is a nightmare both financially and logistically. Needless to say, with so much uncertainty still surrounding the future of the pandemic, rescheduling the Games is a massive challenge. In putting together the 2020 Games, Japan reportedly spent a staggering $12.6bn during a monumental process spanning nearly a decade on raising the stadia, the Olympic village, infrastructure, etc. Having said that, postponing the Olympics is the most rational decision in the given circumstances, since not only the lives of thousands of athletes and officials would be at stake, but also those of the estimated 40m visitors. Sports can create hope where once there was only despair, said the late Nelson Mandela, arguably the greatest leader of the 20th Century. It is important, therefore, that Japan and the rest of the world keep the Olympic dream alive and aim for an event better, bigger Olympic Games in 2021 to emerge triumphant from the current setback.