Pakistan: Crash of stocks

THE FRONTIER POST

The country’s stock market crashed on Tuesday after the Supreme Court ordered the arrest of Prime Minister Raja Pervez Ashraf in the famous rental power plants case that surfaced corruption of billions of rupees at a time when the PM was the minister in-charge of water and power sector. The decision came in a petition by PML-Q lawmaker Faisal Saleh Hayat who alleged wide ranging corruption against Raja Pervez Ashraf. The Supreme Court, on March 30, directed NAB to proceed against ministers of water and power from 2006 The NAB, on April 20, submitted before the SC that it issued arrest warrants for 16 accused including the chief executive of the country. The prime minister is accused of taking kickbacks in rental power projects and is also accused of buying property abroad from money earned through corrupt means. As for Pakistani stocks, the Karachi Stock Exchange 100 shares index fell by 570 points in floor trading in the day soon after the SC decision. This is the same KSE that touched thee 100 Index hovering around the unprecedented level of 16,250 points only a week or fortnight before. Was it mere coincidence or a well thought out plan, the fact remains that the verdict was proclaimed when the Tehrik-i-Minhajul Quran chief Allama Dr Tahirul Qadri was just concluding his address in Islamabad after the huge long march originating from Lahore. Soon after, the KSE dropped by around 3.5 per cent to 16,084 points down by 525.29 points from the Monday’s close. Rupee also lost its value in parity with dollar to sell at more than Rs99 for the first time in the country’s history – a historic low. This low, causing from both the loss of stocks and the currency is a natural outcome of an economy is also a dismal record of the tenure of the Pakistan People’s Party-led government which failed in reforming the national economy. Even remittances of $48bn by overseas Pakistanis during this period have not boosted the rupee or lend strength to the stock market. The external sector is also under a similar pressure as the balance of payments position continues to deteriorate on the heels of rising current account gap and heavy debt payments in addition to foreign exchange reserves falling to a little above than $13 billion. The government’s failure in augmenting the recovery of federal revenue is a further addition to the list of failures in meeting different economic targets. The whole scene portrays a grim economic picture because the government more or less wasted the IMF standby arrangement of $13.1 billion to reform the economy by introducing reforms to bring down inflation, repairing macroeconomic regime by withdrawing subsidies and bringing other reforms.