Saturday, June 22, 2024

Economic debacle in Pakistan: Bajwa asks U.S to help with IMF loan

Immigration News

Ahmad Shah Ghanizada
Ahmad Shah Ghanizada
Ahmadshah Ghanizada is the deputy editor in chief for The Khaama Press Agency who manages and overlooks the English edition.

Shehbaz Sharif-led hung-parliament, which assumed power in April’s parliamentary election in Pakistan, has daunting challenges to fix. Pakistan is crippled by a host of challenges. The nation of 220 million is at a challenging economic juncture. Pakistan’s fiscal and balance of payments deficits have shocked the nation and all the populist policies  turned into a fiasco. Over the past one year, Pakistan’s foreign-exchange reserves have shrunk by more than half.   The foreign reserves of Pakistan have come down to $8.57 billion, according to Pakistan’s central bank.   Altogether, Pakistan has debt and liabilities worth Rs 53.5 trillion (in Pak currency),  including the debt of Rs 23.7 trillion under the PTI government. Every other day, the Pakistani rupee is losing its value against the dollar at an alarming rate.  On the other hand, Pakistan imports food and energy in huge quantities. More imports and less export doesn’t let the foreign currency remain in the stock. The current-account balance of the state is another serious concern.

The Shehbaz Sharif-led government has increased fuel prices for the third time within just the last one month to meet the conditions of the  IMF to revive the bailout package. In June , Islamabad inked a deal with the IMF to restore the stalled $ 6 billion financial assistance package.  The Sharif led government was  compelled to slash subsidies on fuel, electricity to meet IMF’s conditions. His political rival Imran Khan and leader of Pakistan Tehreek-e-Insaf  demanded an early election in the nation amid a severe economic crisis. The cricketer-turned Prime Minister Imran Khan is of the belief that an early election could save the nation from devastating consequences.

The economic debacle in Pakistan was not formed overnight. In fact, this is a result of economic mismanagement and lack of long term vision.   Prime Minister  Sharif blamed his predecessor Prime Minister Imran Khan led PTI government for their populist policies that ruined the economy. The blame game will continue, as the national election is approaching. According to Sharif,  PTI policies are the reason for the hike of the petrol price. The condition is so pathetic that even tea-lovers are urged by Ahsan Iqbal, federal minister of Planning and Development of Pakistan, to sip fewer cups of tea. Pakistan is one of the largest importers of tea from others rather than India, which has worldwide fame for her tea production.

Nevertheless, Pakistan is very much prone to economic vulnerabilities. In the past, the state has suffered from balance-of-payments  and  economic crises several times.  Out of them, the most pathetic time was the balance-of-payments crisis  in 1998. At the time of catastrophe, Pakistan was sanctioned by the US for responding to India’s nuclear test.

At the time the people are terribly suffering from the inflation, Sharif and his government will have to reckon with taking politically unpopular steps. Fulfilling conditions of the International Monetary Fund programme is very essential. But if it affects the pocket of common people, Sharif will have to take the risk in the upcoming general election.

Pakistan’s economic disaster is a result of its negative global image and chilling diplomatic relations. The western lenders have always viewed Pakistan with suspicion. The state has a habit of mounting arms and military hardware. They procured arms, even when they pledged funds from other countries. Terror financing is another serious allegation against Pakistan.

Even the OIC states won’t take the risk to save Pakistan. Beijing is expected to extend some fresh commercial loans of over $2 billion to Pakistan. However, China is not happy either with the developments in Pakistan. Pakistan, China’s all weather friend  has  mishandled her economy, despite foreign support. The economic mismanagement has hampered   China Pakistan Economic Corridor (CPEC) . Due to the economic crisis, Pakistan couldn’t implement CPEC at the pace it was expected. 

Amid uncertainty, there is hope. Pakistan is hoping that IMF and some other countries will pump some money. Pakistan’s army chief Qamar Bajwa has requested US Deputy Secretary of State Wendy Sherman, White House and the US Treasury Department to push the IMF to immediately disburse nearly USD 1.2 billion loan.  But the IMF  won’t disburse the whole amount that Pakistan requires to get out of the crisis. Ahead of the general election, the political leaders are concerned about the election, especially after the dramatic Punjab election. Pakistan will have to decide wisely in the general election. The populist policy and pleasing policies may bring a short time relief but this will terribly destroy the economy. 

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