My top two concerns would be the twin deficit Pakistan has. The first deficit is the trade deficit which would eventually end up becoming a balance of payment crisis. We would be forced to go to the IMF for a rescue package Once we do that, the IMF and the political masters that really own the IMF will have the upper hand; imposing certain restrictions on our foreign policies and some of our policies within Pakistan.
I would say that in the next three to four months the probability that we would need another rescue package would be very high. Then the next is the fiscal deficit which reflects that our expenditures and revenues are not matching. The IMF has officially stated that the Pakistani rupee is overvalued by a factor of twenty-seven percent.
Assuming that if we would have to go back to the IMF, then we have to remember that one of the very first prerequisites that they have put forward for countries going to them for a rescue package is a massive devaluation. Whether the devaluation comes in just one go or it takes place in three or four different phases, the devaluation would be in the range between ten to twenty percent.
Dr Farrukh Saleem is currently an Anchor on Channel 92, a columnist for the English newspaper, The News. He is a game theorist by training. The views expressed in this article are author’s own and do not necessarily reflect the editorial policy of Global Village Space.