Thread by @AqilSajjad

Thread on the origin of the current economic crisis. By 2020-21, the current deficit was under control. Had a small, $1.85b CAD in 2020-21. And the bulk of that came in the last month ($1.6 b)
tribune.com.pk/story/2311476/…

Then we went down the same route. The govt went for growth without reforms. Imports started rising (as they're bound to since a higher GDP also has a higher import component).

So the current account deficit jumped sharply in the next few months. And Daronomics also came back with the SBP selling dollars in the market to finance this deficit and artificially propping up the rupee

The current account deficit for the next six months (July-Dec 2021) rose to a dangerous $9.09bn
dawn.com/news/1670998

In the first 9 months of the fiscal year (essentially the last 9 months under PTI), the CAD reached $13.2 b:
dawn.com/news/1687094#:….

During these 9 months, the SPD used $4.7 b to finance the CAD from its forex reserves (i.e. return of Daronomics)

https://twitter.com/ajpirzada/status/1562494358188093440

This is where the current crisis basically came from. Another high growth story unaccompanied by reforms resulting in balooning imports which were fueled further by using SBP's reserves to finance the external deficit

The oil price gimmick by IK was a cherry on top of it. But that is not where the crisis started. The (PTI) govt needed to put some breaks on the economy around the start of the 2021-2 fiscal year but did the opposite and worsened it by using SBP reserves to finance the CAD.

Interestingly, when Shaukat Tareen became fin min, there were voices within PTI warning that he might do this and take the country into another crisis. Especially notable in this regard was @MoizUrRehman_
who along with a few others went to plead with IK to avoid doing this

The warning went unheeded. And today, PTI and its supporters are blaming the entire crisis on the VONC and the new govt even though many of them should know better. Just as PML-N and many anti-Insafians kept blaming PTI for the 2018-19 crisis instead of PML-N out of partisanship.

Politically, in some sense there is 'poetic justice' in this. PML-N was entirely to blame for the 2018-19 crisis but had a party blaming PTI for destroying the economy. Today, the roles have reversed and it is now their turn to get bashed with PTI having fun.

However, while partisans play their propaganda games, the country suffers. The discourse continues to get polluted with silly talking points instead of moving towards demanding reforms that are needed to fix the economy. The end.