HE latest data for the country`s external account shows that the current account deficit is rising at a rapid pace. In the first 10 months of the fiscal year, the deficit has risen to $7.2bn, more than triple the figure for the same period last year. Even month on month, between March and April of this year, there was a sharp spike of almost 100pc in the size of the deficit. For many months now, we have been hearing the government`s spin on the growing deficit: it argues that this is a temporary state of affairs and is due to machinery imports. Once the machinery is installed and running, it says, the deficit will be reversed. This is the same argument that the Musharraf regime made in its last few years. But, instead of reversing, the deficit took us back to the doorstep of the IMF.

The size of the deficit is shaping up to be the government`s biggest challenge now; unfortunately, there are no signs that it sees it that way. It is difficult to accept that the spike in imports is due to machinery imports under the CPEC project, since many CPEC imports are not showing up in State Bank data as the payments appear to be settled in China without passing through the government of Pakistan`s accounts. The gap between State Bank data and that of the Pakistan Bureau of Statistics points to this, and that gap at $3.5bn is double what it was last year. The State Bank is conducting a large reconciliation exercise to rectify this gap, and once that is done, we are going to see a jump in the current account deficit. The situation on the external front is deteriorating at an accelerating pace and there is no plan, not even thinking in sight, to acknowledge this reality, let alone tackle it.

The government is increasingly giving the impression of having surrendered its obligations to manage the affairs of the country, and has preferred to put all its eggs in the CPEC basket. To every problem now, the answer we receive is, `CPEC will fix it`. For the next year, the government wants to step on the accelerator and take growth beyond 6pc, which it might yet accomplish. But that acceleration will come at a high cost, through borrowing and squeezing existing taxpayers even harder, and through bundling all manner of frivolous costs into the power tariff. Without rectifying the external and fiscal deficits, Pakistan cannot afford high growth.

Speeding up growth at the expense of the country`s fiscal and external accounts is tantamount to taking drugs to experience a temporary high. There is always the inevitable hangover once the `good times` end. What is more worrying is in this case we are building up these large vulnerabilities precisely as the outflows from the CPEC projects are set to commence.