The myth of Pakistan's stability

This is not how it works. The biggest folly that any wielder of power can fall prey to is to take their own power for granted.

- KHURRAM HUSAIN

It does not work that way. The world is not made of Lego blocks that it can be made, disassembled and remade into whatever shape one fancies. Trying to treat it as such undermines the very roots from which one's power grows.

The government of Pakistan has some cause to celebrate the fact that it has stabilised the economy, to take one example. This is the fifth time I am seeing a government celebrate the return of stability since 2001, so quite aside from how each of these episodes worked out, it is worth considering the enormous cost that each such cycle of stabilisation brings.

For starters, consider how the cost of each balance-of-payments crisis gets larger each time we go through it. In 2008, for instance, the total foreign exchange reserves plummeted by $7 billion from peak to trough before an IMF programme was initiated and another round of stabilisation launched. The next such fall began in 2011 and by 2013 reserves had fallen by $10bn — and another Fund programme.

Then came the next fall, starting in 2016 and bottoming out in 2018, during which reserves crashed by $10bn again. And the last such fall began in 2021 and bottomed out in 2022, after burning through $13bn, perhaps the single largest and fastest fall of them all.

These figures relate to the state and how its resources get burned during one of these episodes. There is another set of figures we could look at to see how the people fare through all this. This is real wages, which means wages of the working poor and how they are impacted by inflation and devaluation that inevitably accompany each of these episodes.