Economic reforms: if not now, then when?

The incumbent government claims it saved Pakistan from imminent bankruptcy and successfully resumed the International Monetary Fund programme. However, Pakistan’s financial health worsened after the floods and now, the debt and capital markets are sending alarming signals that depict nervousness among investors and creditors. The stock market remains jittery and the continued weakness in the value of sovereign bonds shows high levels of credit default risk. The country is seeking assistance from international lenders, including through rescheduling of debt and additional funds. Although this greatly reduces bankruptcy risk, it can’t put the economy on a strong foundation. For decades, the country has remained stuck in a vicious short-lived boom and painful bust cycles. To break free, policymakers must implement economic reforms that can put the economy on a sustainable path to recovery.