OPINION
Ammar H. Khan
The Groundhog Day conundrum is the economy stuck in a loop?
litical musical chairs continue, the country continues to suffer as a global commodity super cycle ramps up expected inflation, and eventually interest rates, while the government actually struggles to govern. The friendly countries who either supply us with energy, or have friendships as high as the Himalayas, have also figured the three-year groundhog day pattern, and have started to either politely decline requests for fresh facilities, or rollovers, or have made their support contingent on continuation of the IMF program. All roads lead to the IMF, as they have for the last sixty-four years. Pakistan continues to be a consumption driven, and import fueled economy despite multiple prescriptions for structural reforms. Heavy dependence on imported energy, and more recently imported edibles despite being an agrarian economy n the 1993 cult classic, Groundhog Day, Bill Murray being prohas further made the balance of payments position susceptible tagonist of the movie re-lives the same day again, and again, in a to the global commodity markets. A fiscal deficit which is rareloop. It is estimated that he re-lives the same day 12,395 times, or ly tamed, and an incentive structure which largely awards rent just sixteen days short of thirty-four years. Every day the protagseekers continues to move capital from productive export-orionist wakes up, he lives the same day on a loop. ented endeavors to informal non-productive activities. A low Pakistan’s economy also seems to be following some iterinvestment to GDP ratio, and consequently sluggish growth ation of a sovereign groundhog day. There is a political crisis every few in productivity over the last two decades are all symptoms of years, which is followed by a balance of payments crisis, an organic, or a an economy which is either being fueled by borrowed foreign propped up regime change, and then a tour of friendly, and not so friendcurrency, or through largesse of one friendly country or another. ly countries for some concessional loans, or dollar deposits. The same A monetary structure which subsidizes cost of capital for the loop is repeated every few years. Pakistan has approached the Internarent-seeking elite without having in place any mechanism for tional Monetary Fund (IMF) for a standby arrangement, or extended penalties in absence of targeted growth continues to fuel inflafund facility at least twenty-two times during the last sixty-four years, tion for rest of the country. bringing our groundhog day to a sweet average of three years. The same The groundhog day is here to stay. Over the next few story repeated every three years, with little-to-no reforms conducted weeks, we may eventually see subsidies on fuel being eventually in-line with the spirit of the program. removed, which would lead to second and third rounds of inThe recent crisis has similar ingredients, a politically motivated flation as price levels across the board increase. As global food subsidy which encouraged demand for fuel in a supply stressed market, prices continue to increase, we will find it increasingly difficult a regime-change during a tumultuous economic period, and a new to ensure affordability of basic staples given our ever increasing government which is running around like a headless chicken. As the poreliance on imported edibles. The usual panacea is of structural reforms, but that has not worked in the last sixty-four years. The way things are going, the groundhog day may continue for the next sixty-four years or even more. Countries are transitioning away from one state of development to another, but in The writer is an absence of a productivity oriented outlook, we seem to be largely comfortable with repeating the same loop independent every few years. A monetary boost induced high growth, fueled by imports, followed by an up-tick in inflamacroeconomist and tion, a twin-deficit, and a monetary contraction resulting in growth lower than the population growth rate. energy analyst. Rinse and repeat. Every day in the cult classic starts with the radio playing, I Got You Babe by Sonny & Cher. If we continue on this track, a time will come where we may not have any friendly countries to say I Got You Babe. Repeating like a broken record, it is time to change orientation of growth, and focus more on investment and export driven growth, else we may have to live the groundhog day till infinitum in the multiverse.
Well what if there is no economy. There wasn’t one before
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COMMENT
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