Covid-19 lockdowns are a ‘luxury of the rich,’ says Pakistan’s central bank governor

The coronavirus pandemic is a public health crisis and until it’s addressed, there will most likely be economic hardships ahead, said Pakistan’s central bank governor Reza Baqir.

Pakistan lifted a two-month-long national lockdown in early May. However, Prime Minister Imran Khan’s government is currently targeting outbreak hotspots in the country and locking down those areas again, because Covid-19 cases surged once the countrywide lockdown was eased.

“We are very concerned. First and foremost, this is a public health crisis – we have to remind ourselves of that,” Baqir told CNBC. “And, only on a secondary basis, then it becomes an economic crisis. Until the public health crisis is addressed, we should continue to expect challenges on the economic front,” he added. 

According to Baqir, prolonged national lockdowns are a “luxury of the rich,” while “for countries like Pakistan, the trade-off between lives and livelihood is a very real trade-off.” 

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He explained that Pakistan has many day laborers who earn daily wages, and that a lockdown would have abruptly cut off their only source of income. Without savings to dip into, many of those people would have been faced with starvation, he said. 

To help the economy weather the coronavirus crisis, Pakistan’s central bank has injected about $7 billion, or 2.5 percent of GDP into the economy, in terms of liquidity support to households and businesses. Last week, it also slashed the monetary policy rate by 100 basis points to seven percent. 

“There is no doubt that we face grave challenges,” Baqir said, adding, “I think the smart lockdown strategy of locking down hotspots in cities so far is working reasonably well, and we are confident that, with the combination of measures, for us, on the economic side, we should come out of this crisis largely unscathed.” 

Pakistan has reported more than 213,000 cases of coronavirus. The number of infections surged to 4,300 as of Thursday, with 78 dying in a 24-hour period.

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