Lahore School of Economics

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Growth versus stability

Dr Rashid Amjad

The consensus amongst the economic policymaking triumvirate in government — finance, planning and State Bank — that an IMF-prescribed economic stability package was the only solution to Pakistan’s economic ills and road to eventual growth has begin to show cracks. And as in previous times, it is the Planning Commission that has fired the first shot across the bow of the State Bank and the finance ministry.

At a recent meeting of the Monetary and Fiscal Policy Coordination Board, the Planning Com­mission purportedly argued for three vital policy changes that lie at the heart of the current economic policy stance of the government. The first to reduce further the interest rate; the second to hold the exchange rate at near its current rate (Rs160) and not allow it to be dictated by market forces alone; and the third to pursue supporting fiscal policy measures to stimulate the nascent economic recovery seen in the last few months and led by large-scale manufacturing and the construction sector.

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posted by S A J Shirazi @ 1/05/2021 10:07:00 AM,

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