Under the pre-Covid IMF rehab, it was a non-flexible approach to monetary & fiscal tightening. The tables have turned. For the hawks as well.
The Hafeez-Reza duo have re-written their prescriptions. Reza Baqir loosened the discount rate by 425 bps from a contracting 13.25% to an accommodating 9%. Host of other measures are announced to keep the businesses solvent, provide liquidity, offer cheap loans to business & importantly, keep the currency stable.
Hafeez’s biblical austerity measures have blended with non-traditional “government spending” because of the “multiplier effect”. The purse needed to be unzipped.
Fall in oil prices have changed the mindsets. The government is focused on reducing the inflation – from 14% in Jan to 8% in April – by passing on fuel prices impact, curbing food exports & lowering duties on food produce.
April, May & June are about giving steroids to the economy. It should work. The real reforms – power sector, business climate, direct taxation, public sector entities, exports growth & digitalisation are work-in-progress. Giddy up!
Chalay To Kat Hi Jayega Safar, Ahista.. Ahista!