Former SBP Chief Urges Resolution of Budget Deficit-CAD Puzzle to Help Country Advance

Former governor State Bank of Pakistan (SBP) Dr. Reza Baqir has pointed out a significant connection between the country’s budget and current account deficits citing International Monetary Fund (IMF) data. In an online conversation “Pakistan: Is there a way forward?” with economist Atif Mian, the former central bank governor emphasized the importance of dialogue and debate at all levels in order to generate potential solutions. He said putting the right people in the right positions will help the country advance. Baqir explained the IMF is dealing with the issue of who to trust in Pakistan. As the coalition government fulfills commitment after commitment, the lender is still trying to figure out who it can trust in Pakistan to resume its $6.5 billion bailout program. He claimed the IMF is assessing “who is in power” to ensure that future commitments to resume the program are not only made but also carried out. “We will come out of political crisis soon…there is a way forward,” he added. On the contrary, Pakistani-American economist Atif Mian said the government no longer has any credibility. Pakistan is currently in a fragile situation as a result of poor decisions made by several institutions, including the government. Mian explained there is a growing perception that Pakistan is no longer a desirable destination. A significant number of people have already left the country as a result of the ongoing crises. India and Bangladesh did not have the same experience. He claimed that governments ignored those who were steering Pakistan in the right direction and allowed them to depart the country. He added that Pakistani society needs to change for the economy to become self-sufficient.