Before coming to power, Imran Khan said Pakistan market will be flooded with money. It crashed this week.
Pakistan Prime Minister Imran Khan continues to talk down the country and its economy. He was finally successful in causing the market to crash on 8 October, after a series of faux pas, U-turns and zero-policy statements. He continues to assure the world that Pakistan is bankrupt because of the previous government. To show for Khan’s performance, his government sells eight buffalos in the PM House, which had been gifted to former PM Nawaz Sharif, in a highly publicised auction. They also tried to sell four old helicopters and auctions old cars.
Economists have been saying that given the current condition, Pakistan will have to seek an IMF bailout soon. But Imran Khan and the PTI’s repetitive accusations of beggary on Nawaz Sharif perhaps prevented him from taking a timely decision on this and introduced further uncertainty into the market. Khan had also been asserting that once he is in power the international community and offshore Pakistanis would flood the country with money because of their confidence in an ‘honest’ leader.
The Imran Khan government even announced that Saudi Arabia would be giving – no, this is not made up – $10 billion to Pakistan and followed this up with a trip to Saudi Arabia. He came back and announced that the Kingdom of Saudi Arabia has been invited to be a strategic partner in CPEC.
This was refuted by the Chinese authorities. As per the agreements between China and Pakistan, only with mutual agreement can a third party become a part of CPEC. Before this, government advisor Razzak Dawood had given a shocking statement to the Financial Times saying that the government will suspend all CPEC projects for a year and review them thoroughly. Pakistan refuted this. Observers believe army chief General Bajwa’s trip to China after Dawood’s statement was essentially a damage control exercise.
The government then took a U-turn and announced that Saudi Arabia will not be a partner in CPEC. Finance minister Asad Umar stated that Pakistan will be looking to ‘friends’ (read China, Saudi Arabia etc) instead of the IMF. However, nothing was forthcoming from China either. Foreign minister Shah Mehmood Qureshi had reacted angrily to the second suspension of Coalition Support Funds by the US and made defiant statements at the time.
However, during his UN General Assembly trip he ended up pleading the US for money for the armed forces. Clearly, he was snubbed. He was even willing to consider offering jailed Shakil Afridi, of the Osama Bin Laden operation fame, in return for some money. But the US is not budging – various statements show that the US will not settle for anything less than safe havens of terror groups being destroyed and their financing being squeezed. Nor is the US will to work on promises. It wants evidence.
As all of this unfolded, investors became jittery seeing no viable plan on the horizon. Then, former chief minister Shahbaz Sharif was suddenly arrested in a stunning move. The arrest came after the stock market had closed for the day. Perhaps the government was hoping the weekend would serve as a shock absorber for this horrifying move. The arrest is shocking because the case on Sharif is probably fictional: A housing scheme that never happened and for which no monies were exchanged.
The outrage then spurred Khan to make an address in which he said himself that one of the reasons he is addressing the nation is because he wants to dispel the images of Shahbaz Sharif becoming a Nelson Mandela because of his arrest. He further presented the completely unqualified chief minister, Usman Buzdar, he has appointed in Punjab as the ‘tabdeeli’ (change). And then proceeded to introduce a toilet cleaning scheme. The nation was in shock. Here they wanted clarity on policy, and the man was talking corruption, bankruptcy, toilets and Buzdar tabdeeli. The result, obviously, was the crash in the Karachi stock exchange which fell by over 1,300 points in a single day causing wealth destruction of over Rs 110 billion in a single day.
This was accompanied by a 7 per cent devaluation of the rupee and the decision to approach the IMF was announced. Earlier, huge price increases in gas, electricity, petrol, and urea were announced. Consumers, investors, traders continue to reel in horror at the steep economic decline within a mere 50 days or so.
As I write, the stock market continues to fall. Sentiments in Pakistan remain negative because the PM continues to sell incredibly stupid and half-baked schemes to the public. He recently launched his housing scheme to build – this is not made up either – 5 million homes that would cost $180 billion. To put the scale in perspective, there are a total of 4.9 million pucca houses in all of Pakistan’s urban areas; 5 million houses in five years means constructing more than 2,700 houses per day; $180 billion can construct almost 13 Diamer Bhasha dams for which he has joined the chief justice in his appeal for charity funds. They have thus far collected about $3.7 million only for the dam – that too mostly via forced ‘charity’ by cutting salaries of employees without their consent.
It is now abundantly clear that the vortex Pakistan’s economy is in right now will not disappear till a regime change.
The author is a columnist and human rights defender based in Lahore.