C/A, fiscal imbalances: Finance minister doing little or nothing?

Caretaker Finance Minister Dr Shamshad Akhtar has done little to deal with the current account and fiscal imbalances, said former finance ministers Dr Hafiz Pasha and Salman Shah. While talking to Business Recorder, both Pasha and Shah stated that there is nothing to indicate that the Caretaker Finance Minister has taken any steps to prevent the situation from becoming bad to worse.
They pointed out that foreign exchange reserves and fiscal deficit are deteriorating further during the Caretaker period. In 2017-18 the trade deficit was $37 billion while the fiscal deficit was projected to go beyond 7.5 percent of GDP - and these two imbalances would become worse when the next elected government takes over power, they added.
Hafiz Pasha and Salman Shah wondered whether Akhtar was preparing any guidelines for action by the next government targeted towards dealing with the grave economic challenges that the country is facing today.
According to Pasha, some measures could have been taken during the interim set-up including: (i) increasing cash margin by the State Bank of Pakistan (SBP) for imports to deal with speculation; and (ii) exporters could have been provided support by transferring cash against exports incentives.
Hafiz Pasha also pointed out that there was speculation in the market that the rupee value would further erode - which was encouraging importers to increase imports as they would become more expensive as the rupee lost value.
Pasha stated that the fiscal deficit appears to have exceeded beyond the expected slippage as the caretaker government has been unable to control expenditure - development and current. There is also speculation that the caretaker government may have made some payment to the power sector to reduce the circular debt but this has not been confirmed, he added.
Former Finance Minister, Salman Shah stated "so far no mitigating measure is visible and foreign exchange reserves situation is dire." He said analysis of the impact of devaluation on exports is not yet known.
Shah said that at this point in time no one knows if Shamshad Akhtar is doing anything to boost foreign exchange reserves.
He said that external imbalances will further deteriorate if oil prices continue to rise. Shah maintained that the government should have done something to increase the country's exports.