Rarely have I seen such an oblivious tsunami leader come towards him. As Pakistani Prime Minister Imran Khan works daily to preach family values ​​back home, the spiral of inflation winds its way down its chain of consequences that even the most dedicated “spin masters” would struggle to contain. And that’s just the beginning.

It is not clear how the talks with the International Monetary Fund are going, but it is easy enough to see that they are not progressing smoothly. Whether they come to a deal in Washington, DC, or come back with nothing more than a commitment to keep talking (as they did in June), the days ahead will have to see further hikes in prices. gasoline and electricity prices, more taxes, more exchange rate depreciation and rising interest rates. The market is already integrating all of this. The only question is, how far will it all go?

Financial markets

Consider what is going on in the financial markets. Last Friday, Pakistan’s former finance minister Shaukat Tarin told us that talks with the Fund are largely over and are only “validating the numbers” on some new data that had been provided, that a joint statement should be issued “in a few days” announcing the successful resumption of the program.

Since Monday, the exchange rate has plunged two and a half Pakistani rupees on the interbank market, and about three Pakistani rupees on the open market (depending on the city). As of this writing on Wednesday, the rupee had hit 174 in interbank trading according to a few insiders, with little to no sign that volatility was about to end.

The situation is similar with interest rates. At a public debt auction held on Wednesday, the results of which had not been uploaded at the time of this article’s submission, most bids clustered around three-month maturities and demanded yields were significantly higher.

The auction aimed to raise 600 billion Pakistani rupees and secured bids for 715 billion Pakistani rupees, leaving little room for selection. Almost half of the bids were for three months, and only six of those bids were offered at yields less than or equal to the three-month paper yield threshold at the last auction held on October 6. The remaining 95 bids were all higher. .

The performance thresholds, once announced, will tell us more, but one thing is certain. The market began to demand higher yields from government papers again, as it did during the months of February through March or April. At the time, he was emphatically told that no rate hike was happening no matter what happened on the inflation front, and the market calmed down. But that moment only lasted a few months.

The current account deficit widened from May, and with inflation joining the ranks and also soaring in the coming months, the State Bank of Pakistan would have little other choice. than to comply with the demands of the markets, especially if it wants to stay in a Fund program.

The market knows something that the government and its spinning corps cannot erase. He knows the party is over and soon the prices will have to reflect reality. The first prices to start adjusting to the new reality are energy and the price of money (reflected in the exchange rate and interest rates). In the coming months, this adjustment will spill over into the rest of the economy, manifesting itself in food and other essentials.

Is Pakistan Prepared?

Is Imran Khan ready to face this reality which has already started to arrive on his shores? The only thing any leader facing such a situation should do is reach out to as many political parties as possible and come to an agreement on the package of measures that will be necessary to deal with the situation.

In tough times, leaders need bridges – as much as possible. The next thing would be to start preparing the public through a concerted messaging campaign. And the third would be to put in place as many safety nets as possible to save the most vulnerable from the ravages of what is to come.

How well does this happen? In fact, how focused is Imran Khan on the challenges before him? Instead of building bridges, he damaged the one bridge that was crucial to his power – the one with the security establishment, the reason he could continue to be “on the same page” with the props. same of his reign.

Its relations with the opposition have always been combative. And his relationship with his allies in government is functional at best, although it is worth keeping an eye on the fate of Jam Kamal’s chief ministry, lest this sort of thing spread beyond Baluchistan. .

Are there effective messages? No, all we are seeing are individual ministers trying to save their own skins as Prime Minister Khan seems preoccupied with brushing aside the swirling rhetoric that he makes decisions by resorting to ‘magic’.

Faced with questions about the growing difficulties of populations faced with rising prices, we hear only defensive arguments according to which “it is global” or promises of subsidies. One particularly committed gentleman proclaimed loud and clear that people are ready to carry petrol at 200 Pakistani rupees in their love for Imran Khan!

The gap between what a leader says and what people experience cannot increase beyond a certain point. The timing can be different from country to country, depending on various things. It would be a terrible mistake for the Pakistani Prime Minister and his cronies to underestimate the strength of the wave that will hit them in the months to come. Being prepared will be essential for survival.

This article first appeared in Dawn.