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Daily Times Editorial 2 June 2020

Remittances under threat

 

No matter how expected a slump in remittances was, news items confirming such fears still make for some worrying reading. That is because knowing about and understanding a problems does not always mean that it can be solved easily. Now, just as the economy is contracting for the first time in many decades – anywhere between negative 0.5 and two per cent, depending on whose analysis you are reading – the time has also come for remittances to begin falling short of the usual number. Financial trauma in the US as well as the Gulf countries, where most expatriate Pakistanis live and work, is now having a very pronounced knock on effect on the Pakistani economy for very obvious reasons.
Yet the Gulf dilemma is two-fold. Pakistanis that have become citizens of western countries at least have the option of applying for unemployment allowances and even get paid a good part of their last incomes as they look for fresh work. Though they are unable to send any money home as long as they are out of work, but they do not provide any more problems for decision-makers here. There’s no such thing in the Middle East. Countries there do not offer permanent residency. So people that get laid off over there have a very limited amount of time to find other employment and renew their visas. Otherwise they must leave those countries and come back to Pakistan. And that only increases the overall level of stress in the job market back home. Accommodating a returning army of unemployed people will be very difficult to absorb in a market already hemorrhaging jobs at an unprecedented level.
Remittances are only one side of the revenue story, of course, and the news from tax and export earnings is no better. All this means that the government is going to have to invest a lot of time and effort in negotiating fresh loans as well as getting old loans written off, or at least put off for a while. The whole world is neck-deep in the fight against the coronavirus, so our creditors would be expected to understand that the government will need to be solvent to stay alive. There’s precious little they will get out of us if the coronavirus finishes us off before they can reclaim all the owed money, so it’s in their best interest as well as ours to give us more space at this point in time. The hit to the remittance stream ought to be a timely eye opener, since more bad news is expected with every quarter. It seems this particular graph will go down, for a while at least, before it starts to go up again.

 
 

Limited lockdown only

 

It was pretty much understood that the National Coordination Committee (NCC), chaired by Prime Minister Imran Khan, would never endorse a complete lockdown even though doctors were screaming for it and a high level report, in Punjab at least, asked for exactly that for at least a month; that too beginning in the middle of May, just when the province decided to open up yet more instead. The PM has never been one for shutting down. And his point of view is understandable. Our brave doctors are the frontline warriors in this strange war, and they deserve our highest admiration and respect no doubt, but they still only present one side of the picture. And the government just does not have the luxury of seeing things in isolation.
The other side, which the prime minister finds himself forced to tilt in favour of, represent two concerns. One is the fate of the daily wagers and the like, of course, who would surely start starving if they are stopped from work all over again. And the other is the business section that forms the backbone of the economy. Everybody it represents, too, just cannot afford to sit home for another few weeks. Indeed, as the state bank warned just before the NCC huddle, the economy would suffer to no end and there might even be food shortages if the decision to lock down is taken. Granted, it makes sense in many ways to stop all activity for another fortnight to a month, but practically very few people can really afford to stay home and do nothing.
But all this does not mean we should ignore the potentially catastrophic outcome if the opening continues to bring concerning results. So far it has really not worked out. Numbers of fresh cases, as well as deaths, have gone up in almost all parts of the world. And the trend has been much worse at home. The scenario where the virus spreads far too quickly to handle must be avoided at all costs. The only way to do that, as mentioned repeatedly in this space, is for everybody to observe all standard operating procedures (SOPs) that the government has outlined. Even the prime ministers stressed this point when announcing NCC’s decision on Monday, and it is really up to people now to control the manner of the opening up. Hopefully everybody will display more responsibility this time around. *
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