Dawn Editorials 1st July 2023

Football foibles

THE deficiencies have been exposed. Our national football team losing all six matches they played in June underscores the need for a drastic turnaround. Pakistan have never won a FIFA World Cup qualifier. The next opportunity to break that unenviable record comes in October when Pakistan enter the first round of Asian qualifiers for the 2026 tournament. Performances in the Four Nations Series and SAFF Championship, though, haven’t raised hopes. Pakistan lost to hosts Mauritius, Kenya and Djibouti in the Four Nations Series to finish last in the round-robin tournament before becoming the worst team at the SAFF Championship in India. A 4-0 loss to arch-rivals India in their Group ‘A’ opener was attributed to the team’s delayed arrival in Bangalore — Pakistan reached the host city just six hours before the game. Insipid performances in a 4-0 hammering against Kuwait and 1-0 loss to Nepal followed. For all the hype created, with the Pakistan Football Federation Normalisation Committee parading the fact that it had secured the paperwork to make some foreign-based players eligible to feature for Pakistan, the team flattered to deceive. There was little leadership on the pitch; the players ran around clueless. The FIFA-appointed PFF NC, having seen its mandate extended until March next year, faces a race against time to sort things out ahead of the World Cup qualifier.

Advancing into the second round of World Cup qualifiers guarantees Pakistan more competitive action — something that the team hasn’t seen frequently in the past several years due to turmoil at the PFF. That has hindered development; the lack of a proper domestic structure hasn’t helped either. There are also questions regarding coach Shehzad Anwar, who lost all eight matches since the FIFA suspension on Pakistan was lifted last year. An inquiry is the need of the hour to address the team’s failings. Otherwise, all signs point to history repeating itself when the World Cup qualifiers come around.

Published in Dawn, July 2nd, 2023

 

Terminal decline

PLANS to restructure the national flag carrier have seen umpteenth aborted takeoffs. That, of course, is not to say this is not an objective worth pursuing — but such plans, if they are to see any prospect of success, must take an unforgiving view of the present situation and include measures to act accordingly. The government is looking to undertake what was a Herculean task even a decade ago, but which has become yet more onerous in recent years. Not only is PIA facing cumulative losses of Rs635bn by the end of September, its other troubles, too, have intensified. Pakistan’s aviation industry as a whole has not yet recovered from repercussions of then aviation minister Ghulam Sarwar Khan’s shockingly cavalier remark in the National Assembly in June 2020 that almost 40pc of pilots in Pakistan have fake licences. Even though some irregularities were uncovered, his words later proved to be a gross distortion of facts — but PIA in particular was dealt a near-mortal blow. Is the high-level committee that Prime Minister Shehbaz Sharif has formed to come up with a plan to revive PIA prepared to take the bull by the horns?

If so, the first, foundational step should be to set up a regulatory system in a professional manner, one that is manned by a competent, aviation-specific bureaucracy rather than individuals parachuted in from the air force or various government ministries. An independent, strong regulator — which is only concerned with safety regulations and the management of the airline — is critical to ensure that the operator is positioned to perform well. In the three years since Mr Sarwar took a wrecking ball to the industry, those at the helm of the CAA have not been able to raise standards to a point where international regulators would allow PIA to fly to Europe or the US. Questions about competence and airworthiness continue to dog the national airline and cloud its prospects of revival. It is high time systemic flaws were addressed, instead of applying band-aid solutions that have amounted to nothing over the years. Instead, the government could look towards the European Union Aviation Safety Agency: not only does it have very high standards, but it also has a fund to help developing countries set up their regulatory systems from top to bottom. It would be money well spent.

Published in Dawn, July 2nd, 2023

 

Relief, for now

THE IMF’s announcement that it has agreed to extend a lifeline of $3bn to rescue our crisis-hit economy has come as a relief to all stakeholders: government, business and the public.

Yet the fact that it baulked at the idea of approving Islamabad’s request to complete the ninth review of the just-expired EFF facility and release the $1.2bn tranche stuck for months shows that the lender still has trust issues with Pakistan.

The new agreement comes under the IMF’s short-term Stand-By Arrangement and is structured for a nine-month period to help save the teetering economy.

Even multiple interventions by Prime Minister Shehbaz Sharif, who must be credited for clinching the deal, despite Finance Minister Ishaq Dar’s outbursts against the Fund, couldn’t bridge this gap.

The IMF, which blames policy ‘missteps’ and shocks like floods and the Ukraine war for our declining economy, did not think it a good idea to free politicians and their collaborators in the finance bureaucracy from its oversight in the lead-up to the elections.

It wants Islamabad to strictly execute Budget 2023-24 and not cede to pressure for unbudgeted spending and tax exemptions.

After all, an economy plagued with high inflation, drying dollar inflows and macroeconomic instability takes a long time and sustained fiscal discipline to turn around.

The SBA is a better deal as it ends the uncertainty around fiscal discipline before and after the elections, with fears of an immediate sovereign default receding as reflected by the rapidly surging prices of Pakistan’s short-duration eurobond debt becoming due in 2024 and 2025.

If Pakistan follows the programme, it can unblock financing from multilateral and bilateral lenders and easily secure bilateral and commercial debt rollovers to shore up its foreign currency stocks.

Moreover, the fear of losing IMF support again will keep fiscal authorities on their toes.

But macroeconomic stability will not come free; the Fund demands that energy and foreign exchange market reforms be implemented, and the State Bank must pursue a proactive monetary policy.

That means interest rates will remain high and base electricity prices rise by a third to over Rs33 a unit.

The home currency may stabilise, even strengthen, in the short run, but further depreciation of the exchange rate cannot be ruled out once the administrative curbs on imports and dollar outflows are lifted.

Politicians and policymakers need to recognise that the deal gives them another chance to implement fundamental, structural reforms for long-term debt sustainability and macroeconomic stability.

If we implement the SBA diligently, it will help us secure a new long-term and less-encumbered bailout after the elections once the arrangement ends.

That is crucial to raise multilateral and bilateral funds to boost reserves, and buy some room to execute basic reforms for overall economic stability.

Published in Dawn, July 2nd, 2023

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