Kolkata, July 29:
Imran Khan, slated to be the new Prime Minister of Pakistan, may be pinning his hopes on China and Iran for helping his economy out of dire straits, but if there is one country which can be of maximum help to him, it is India in terms of reducing his dependence on dollar-driven imports, said an ASSOCHAM quick note on state of Pakistan’s economy.
“As he would step into the Prime Minister’s office, the cricketer-turned politician would find the pitch playing very difficult on the economic front. He would not have much of an elbow room with the country’s foreign exchange reserves at less than USD 10 billion”, said the ASSOCHAM.
Congratulating Mr Khan on his victory in the Pakistan elections, the ASSOCHAM said, “The new Prime Minister has to play through a difficult inning in the short run and all the solutions, suggested in his victory speech seem to be of long-term nature. It is like: as a captain, bowling second you do have much of a score on the board to defence and you got to take wickets”.
With Pakistani Rupee sliding to near about 130 to a USD, having been devalued by the central bank thrice since December, imports have become very expensive while inflation is ticking up.
“The IMF solution could be in sight, but can the new Prime Minister, riding on his popularity among the people, particularly, the youth, afford to impose strict conditions on the citizens, which generally accompany IMF bail-outs”.
Refined petroleum oils, machinery including computers, electrical machinery, iron and steel and automobiles are the top five of the Pakistani import items and are essential for the country.
“Pakistan can seek government to government type of trade deal with India which can export almost all these items in a counter-trade, without the hard currency. That could be a big relief for the foreign exchange reserves of Pakistan while India has enough space for such a deal , given close to USD 400 billion foreign exchange reserves with the Reserve Bank of India”.
“But , the new Pakistani leadership has to show , as he has shown during his victory speech, statesmanship in reaching out to India , which can also import several items from across the border and the transactions can be settled without the hard currency, which is the main problem with Pakistan today,” the ASSOCHAM note said.
It said, while China and Iran may be strategically important to Pakistan, Beijing and Tehran are braving their own trade and political tensions revolving around trade war and the threat of sanctions, respectively with the US. Under the circumstances, the first port of call for Imran Khan should be New Delhi, the chamber said.