Pakistan economic crisis, falls In the fiscal year 2022-2023
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Pakistan is currently in a dire situation, with a struggling economy and politicians engaged in a state of war, leaving the people crying out for help. While Pakistan has been in a perpetual state of chaos since its inception, this time, the situation is far worse. The country is facing severe medicine shortages, with essential drugs like Panadol, Calpol, and bruxism being unavailable. Inflation stands at a staggering 31.5%, the highest since 1974, while food prices are touching the sky. Milk sells at 235 Pakistani Rupees per litre, a kg of chicken costs 700 to 780 Pakistani Rupees, and boneless meat sells at 1000 Pakistani Rupees per kg. Fuel prices are also skyrocketing, with petrol selling at 272 Pakistani Rupees per litre, diesel at 262 Pakistani Rupees per litre, and kerosene at 217 per litre. Moreover, the currency is in a free fall, with the Pakistani rupee hitting an all-time low of 278 against the dollar this week. Unemployment is also a significant concern, with over 1 million Pakistanis projected to lose their jobs, mostly in the textile sector. The unemployment rate has been steadily rising since 2019 and is projected to reach 8.5% in 2023. The GDP growth forecast for 2023 has been trimmed to 4.3%, and the foreign reserves held by the Pakistan Central Bank are critically low at just 3.25 billion dollars. Terrorism is also a significant concern, with terrorists carrying out 58 attacks in Pakistan in February alone, averaging over two per day. The situation in Pakistan is dire, and urgent measures need to be taken to stabilize the economy, create job opportunities, and ensure the safety and security of its citizens. |
| Pakistan economic crisis, falls In the fiscal year 2022-23 |
Pakistan's current situation is setting new records, but not in a positive way. The country's economy is in dire straits and the politicians are at odds, leaving the people to bear the brunt of the mess. The situation is so bad that Pakistanis are making fun of their own country through memes, as it is the only affordable means of entertainment for them. The question arises, why is Pakistan in such a critical situation, and how can it possibly climb out of this hole? Pakistan's economy has always been unstable, but the difference now is that it is nearing collapse. The primary reason for this is the country's debt, which has reached an unprecedented level. According to the World Bank, by the end of December 2022, Pakistan's total external debt stood at a staggering 17.87 trillion Pakistani Rupees. This is one of the highest levels of debt in the world, and to make matters worse, Pakistan has to repay a large chunk of this amount right away. In 2023 alone, Pakistan is expected to repay 22 billion dollars to foreign lenders, but the question is, where will it get this cash from? Pakistan's Forex Reserves are dwindling, and the country has just 3.2 billion dollars left in reserves, which is not nearly enough to meet its debt obligations. To make matters worse, Pakistan is suffering on the foreign direct investment (FDI) front. Usually, countries meet their debt obligations by receiving new investments, but Pakistan's FDI has plummeted 44 per cent during the first seven months of this fiscal year. In the last fiscal year, Pakistan received 1.22 billion dollars in FDI, but in this fiscal year, it has received just 683 million dollars. This means foreign investors are wary of investing in Pakistan, and this situation is unlikely to improve anytime soon.
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| Pakistan economic crisis, falls In the fiscal year 2022-23 |
Take a look at this report. Moody's, a global credit rating agency, has downgraded Pakistan's sovereign credit rating from caa1 to caa3. The reason is that Pakistan's foreign reserves are insufficient to cover its imports and external debt obligations in the near term, increasing the risk of a debt default. This downgrade will have a negative impact on Pakistan's ability to attract foreign investment, as investors will assess the country's credit rating and ability to repay loans before investing. This report is likely to exacerbate the current economic turmoil in Pakistan. Why isn't the IMF helping Pakistan? The IMF has already provided a bailout to Pakistan but has stalled any further financial aid until certain conditions are met. These include setting up an anti-corruption task force, raising electricity tariffs, and imposing a levy on petroleum products. Pakistan has already raised gas prices and is expected to announce a similar increase in the price of electricity. Taxes on luxury goods and services have also been hiked to secure the next batch of IMF loans. These austerity measures may not be enough, and the Prime Minister may need to introduce more in the future to meet the IMF's demands. It makes you wonder about Pakistan's economic future.
The IMF has many reasons for not giving money to Pakistan. Two of them are very important: one is the doubt that Pakistan will be able to pay back the loan as we have been saying and two is the fact that rich Pakistanis do not contribute much to the economy. Here is a statement from the IMF's managing director, who explained the situation very well. He said: those who earn good money in the public or private sectors need to help the economy. The wealthy should not benefit from subsidies, but the poor should. The IMF wants rich Pakistanis to do their part. Because when the poor are suffering, the rich are still living luxurious life. They are buying expensive cars and importing them from abroad. Reports say that in the last six months, Pakistan spent 1.2 billion dollars on imported luxury cars, high-end electric vehicles and spare parts. The buyers include Pakistani businessmen and army generals both current and former. Look at this report that Dawn published last year. It says that ex-military officials in Pakistan were allowed to import bulletproof vehicles without paying taxes. This shows you how wrong not only the Pakistani government but also its rich and elite. Instead of supporting the government or donating money to the poor, they are enjoying their fortune while the economy collapses. At this point, we ask ourselves: is there a way out? Can things get better? Can Pakistan recover? Yes, it can but for that, its leaders who keep insulting each other will have to put their differences aside and agree on how to solve this mess. They say that an eye for an eye makes everyone blind but sadly, it seems like they don't care about how miserable their people are.
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