In staring contest with IMF, Dar blinks first

If one was to pick the worst economic decisions in the history of economic decisions made by Pakistani policymakers, the Dar peg would easily be among the worst, given the disastrous economic consequences that it entails. The consequences, which are already beginning to manifest, will significantly erode the purchasing power of all segments of the population — except the rent-seeking class, which continues to be protected by every policymaker and politician at the helm. The global commodity supercycle The year 2022 started with volatility both on the political and economic fronts. Globally, the commodity supercycle was peaking as a post-pandemic demand surge pulled up prices of commodities across the board. Pakistan, being a massive commodity importer, continued to pay ever-increasing prices for commodities across the spectrum, whether it was petroleum products, or something as basic as edible oil, or pulses. Pakistan’s structural weakness remains its heavy dependence on the import of staple products — a problem that needs to be fixed, as it is already too late. As the commodity supercycle kept gaining traction, political volatility in Islamabad took attention away from economic decisions that would affect the whole population. As those at the helm consider ‘being selfish’ a value, the decision to fix fuel prices seeded the perfect storm.