What’s happening to the Pakistani economy?
Pakistan is going through a tough economy which you need to have a look at:
- 1. Pakistan’s economy facing a Lack of money exchange Shortage of food, fuel, and supplements
- 2. Political issues in Pakistan’s economy
A significant economic crisis is emerging in Pakistan. Pakistan’s economic crisis would soon be tested in the same way that Sri Lanka’s was. the crisis with a dearth of foreign currency for currency exchange, food, fuel, and medicine.
Complicated political parties seeking to gain control through populist economic policies have harmed and exacerbated the Pakistani economy.
Pakistan’s current account deficit is growing quickly, and its foreign exchange reserves are also rapidly declining. Given Pakistan’s economy’s reliance on imports for both food and fuel, rising global prices have significantly increased Pakistan’s import bill.
- Pakistan’s economy facing a Lack of money exchange Shortage of food, fuel, and supplements
As a result, imports, which totaled USD 44.7 billion in FY (financial year) 2020–21, rose by roughly 58 percent to USD 65.6 billion in FY 2021–22. Foreign investors are being forced to avoid the country as a destination for investments more and more due to the country’s deteriorating security situation and ongoing political unrest. The Pakistani economy is losing both foreign direct investment and foreign portfolio investment.
Azerbaijan, Kenya, Nepal, and Nigeria are among the countries represented. [169] However, during the Sharif rule (2013-17), Pakistan raised its rating to 117/180 in 2017 (with a score improvement of 28, 29, 30, 32, 32 [2013-17]), matching Egypt (better than 59 countries). [170] The National Accountability Bureau (NAB) was founded in 1999 in response to the negative impacts of corruption on the country. The primary goal of the NAB was to collect looted funds from corrupt elements and deposit them in the national treasury. The NAB has recovered Rs 502 billion from corrupt people, setting a new record. Since its creation, the NAB has recovered Rs 814 billion directly or indirectly from corrupt elements, which is more than any other anti-corruption organization.
This has caused a severe lack of dollars in the nation, and the Pakistani rupee’s value has consequently been falling sharply, much like what happened to the Sri Lankan rupee in March 2022. Huge loans obtained from China, Pakistan, and Pakistan’s “all-weather friend and steel brother,” Pakistan, at market interest rates have added to the debt burden. These loans were obtained as part of the China-Pakistan economic corridor. With financially unsound projects like Gwadar Port, Pakistan is currently caught in the “debt trap” that China has created, much like Sri Lanka. In addition, Pakistan has sought assistance from the IMF 22 times since gaining independence to deal with its economic woes, with the most recent instance occurring in 2019.
Pakistan admitted to making the same error as Sri Lanka in underestimating the IMF’s capacity and support program for the sole purpose of avoiding difficult but essentially necessary structural reform measures and instead turning to bilateral partners for financial support.
2. Politics issues in Pakistan’s economy
The Pakistani political crisis began in 2022 when the opposition banded together and filed a no-confidence motion against Imran Khan’s government in the National Assembly, which was followed by national and provincial political crises. The court’s decision, combined with past electoral setbacks, has hampered the PML-N government’s efforts to consolidate power following Khan’s removal in April and raises new concerns about its long-term viability. However, on August 2, the Election Commission of Pakistan (ECP) decided that Khan and his Pakistan Tehreek-e-Insaf (PTI) party had breached campaign financing regulations, which might result in his disqualification from electoral politics. Cyril Almeida, a Pakistani journalist, and USIP’s Colin Cookman, Adnan Rafiq, Tamanna Salikuddin, and Jumana Siddiqui examine the fallout.
Shahbaz’s overall reticence is likely due to deference to Nawaz and his team, who may hold opposing ideas, as well as the reality that he leads an unwieldy coalition of rival parties that will compete in the next election. However, part of the hesitancy stems from the fact that the PDM’s primary purpose was to depose Khan; they did not have an alternative governance plan or economic strategy before assuming power. This lack of planning is now manifesting itself in the face of Pakistan’s economic catastrophe.
