Unnerved by the endless political chaos the traders, manufacturers and service providers decided to go public with their stance on the current economic meltdown. Mindful of the political sensitivities, many tempered their tones but recorded their disappointment with the government over the economic management, particularly the currency market.

Disregarding the political polarisation an elite business platform repeated its earlier call to all political parties for collective efforts to pull the economy out of the current abys and put it back on track.

Before the market could fully absorb the news of the International Monetary Fund agreement (IMF) on the Extended Fund Facility (EFF) that paved way for the disbursal of $1.17 billion, the rout of PML-N in the by-elections in Punjab and the re-election of Hamza Sharif as chief minister on technical grounds, drowned the hopes of political stability in the foreseeable future.

The by-election results last week kicked in a fresh spell of currency devaluation and another cycle of depression in the capital market. Playing on fears, manipulators drove the rupee to stoop to Rs228 to a dollar in the open market and the pushed capital market closed the week little above 40,000 points.

Without a national consensus on major economic decisions, Pakistan will continue spiralling down

Of the $6bn EFF ending in September 2022, Pakistan has so far received $3.1bn. To match the higher financing needs of Pakistan in 2022-23, the IMF has consented to consider an extension of the programme to June 2023 and increase the size of the package to $7bn. The forex reserves meanwhile depleted to a dangerously low level of $9.1bn.

The policy rate now at 15 per cent has yet to tame the galloping inflation currently at a record high level of over 20pc month-on-month as prices of transport and food soared by 60 and 40pc respectively over the last three months.

Some business leaders sounded alarmist but the majority were cautious in their choice of words. They advised the government to appoint the governor of the state bank (SBP) without loss of time for effective management of the currency market that they thought was at the mercy of rogue traders. Over the past three months, the rupee tumbled under the watch of the seemingly helpless SBP.

“No, governor State Bank has no magic wand to fix all the problems but letting manipulators enjoy a free hand in the currency market in the middle of an external front crisis is absurd. Everyone knows that the current exchange rate is unjustifiably low but can a government that fails to appoint an SBP governor in this grave situation inspire trust?” a business leader from Lahore shared his disgust.

Several leaders highlighted risks to different sectors and its snowball effects on employment and inflation. Irfan Iqbal, the Federation of Pakistan Chambers of Commerce & Industry (FPCCI) president, sounded aggressive when he warned of a Sri Lanka-type outcome if rulers fail to put their act together and focus on the economy.

“No, I do not see Pakistan going the Sri Lanka way. Yes, the crisis is deep and the situation complex but it can still be redeemed. The government must do its part but I don’t think it can do it alone. The powerful business elite should trust Pakistan’s potential and lend a helping hand. Instead of fixating on margins and obsessing on ways to capitalise on the system’s weaknesses, it’s time for retrospection. Did we do our part — care for improving productivity or investing in the future?

“Please stop playing the market. The situation is precarious. The big businesses made fortunes in cement, steel, auto, pharma, fertiliser, sugar, banking, etc. A cement tycoon in a recent meeting at Karachi chamber mentioned a 60pc drop in sales but did not care to explain the increase in the price of his produce. To me, there is no justification for such a steep price hike. Such reckless moves further aggravate problems,” Majyd Aziz, former president of the Employers Federation and Karachi Chambers said lamenting the narrow-mindedness of the big and mighty in his community.

Responding to a question regarding what the Pakistan Business Council sees ahead, CEO Ehsan Malik wrote: “Speculating about where exactly the economy might be in a month’s time is alarmist and irresponsible.

It’s clear that the economy is not headed in the right direction.”

“Debating how we got here is less important. We have to arrest the free fall first and then strategise to revive the economy. If there is ever a time when all political parties need to unite, it is now. The country’s solvency and sovereignty are at stake. Our economic

survival calls for entering the IMF’s ‘Intensive Care Unit’. There are now no alternatives.

“The IMF’s help will help us survive, but not thrive. For growth, we need cross-party consensus on at least a 5-year programme of fundamental reforms: taxes, National Finance Commission, energy, state-owned enterprises, agriculture, water and exports. That leaves many areas where parties can differ.

“Starved of essential imports, the industry stands today on the verge of closures and layoffs. Unless all parties unite on a National Economic Agenda, the economy will not come out of a free fall spiral. Those at the bottom of the pyramid will suffer the most. Wake up and act.”

Ehsan Malik thinks that the real effective exchange rate is in the range of Rs95-105.

Published in Dawn, The Business and Finance Weekly, July 25th, 2022