Some reports appearing in a section of the press lend credence to the notion that recent meltdown of the Pakistani rupee was allowed under pressure of the world donor agencies. Without finding a tangible solution, it is regrettable that foreign lending agencies are given a free hand to blatantly impose their version of policies on this nation. The exports of the country had been dwindling for the last four years, which not only increased the size of the current account deficit, but also limited the ability of the country to repay its external liabilities. Depreciation of the rupee is part of the policy given by the international financial institutions in the name of greater exchange rate flexibility. In their views, a ‘weak’ rupee will improve competitiveness and will jump start exports. According to experts, the International Monetary Fund and the World Bank had been demanding the government to introduce structural reforms in various sectors to qualify for further loans. However, it is not a secret that reforms means imposition of more taxes on the citizens to generate additional resources to repay the loans. The term, structural reforms, has become vague in a situation where every section of the government is experiencing system failure. In the wake of political instability, financial indiscipline and mismanagement, reform programme will not bring any improvement in the current state of affairs.
According to experts, investment in China-Pakistan Economic Corridor is the light at the end of the tunnel as the project has the potential to extricate the country from the economic mess. The foreign and national institutions project a growth of 5.6 percent in the gross domestic product for fiscal year 2017-18 as compared to 4.1 percent in 2014-15. The government should also concentrate on attracting foreign direct investment from the countries other than China which will not only ensure financial security, but also geographical security from eternal enemies of Pakistan in the region. By bowing to the IMF pressure, the government has depreciated the Pakistani rupee which will have long term effects on the economy and financial stability. The lowering the rupee value will hardly enable the country to improve exports as exports always depend on the performance of the industrial sector and not on the value of the currency alone. The current account deficits, which emerge on the basis of imports of equipment, indicate faster industrial growth. Only foreign direct investment and conducive business conditions are prerequisite for increase in the growth rate.
