EDITORIAL: The 86 percent year-on-year drop in Afghan Transit Trade (ATT) in September shows how much this commercial arrangement was being exploited for smuggling, and how seriously the government is finally cracking down on illegal cross-border trade with the neighbouring country.
According to reports, ATT recorded for September 2024 amounted to $78.3 million against $545 million a year ago. That’s not all, the figures for the first quarter are down 85 percent as well, from $1,767.9 million (Jul-Sep 2023) to $269.4 million in the corresponding period this fiscal.
This is part of a long, and long overdue, corrective chain reaction. For, it’s for a reason that the dollar-rupee rate began to stabilise once the government decided to put its foot down at the border. ATT has long been used and abused not just for smuggling of goods, but also hard currency through hundi/hawala channels that run through the Pashtun belt.
Let’s not forget that the government was being urged by all sorts of concerned quarters, this space included, to carry out just this kind of crackdown for a long time.
Yet, it was only when the threat of default pushed the country right against the wall that authorities finally sprang into action. If only they had moved earlier the black economy would not have grown quite this large and the country would not have been so embarrassingly stripped of all credibility in the international currency market.
The government must be credited for some of its corrective measures of late. Yet, for all the successes finally coming its way, there is a feeling that it has been unforgivably behind the curve in most cases.
ATT is the best example. It had become an undeclared licence to smuggle while unchecked dollar flight hollowed out Pakistan’s financial structure; yet nobody in Islamabad or Rawalpindi was bothered enough to put a stop to it.
Plugging holes and blocking leakages is more important now than ever; because the economy is finally on the mend. Almost all important indicators are improving, and the IMF programme has started beefing up reserves and restoring Pakistan’s credibility in credit markets. Businesses are counting on further improvements to facilitate more interest rate cuts and stimulate production, exports and growth.
This is also the right time to initiate other reforms that have been delayed far too long. The nightmare of the last few years that brought the country so dangerously close to default should be enough for policymakers to realise that the window provided by the new EFF (Extended Fund Facility) is their last chance to get the house in order.
It must also share its plans of action with the public so everybody can know what to expect, and what to measure its performance against.
Copyright Business Recorder, 2024
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