Pakistan is on the brink. It simply does not have enough money. Prime Minister Imran Khan recently went public on the crisis. “We don’t have enough money to run our country due to which we have to borrow loans,” he said, adding, the “rising foreign debts and low tax revenue had become an issue of national security.” For the first time in its history, Pakistan’s total debt and liabilities have crossed 50.5 trillion Pakistani rupees (PKR), of which 20.7 trillion has been added by the Khan government itself. This translates to every Pakistani now owing over PKR 2,35,000 (1 USD = 176.213 PKR). Inflation and the prices of essential items have soared — headline inflation reached 9.2%, up from 8.4% two months earlier and as of this month, the cost of basic food items have skyrocketed 17% year over year. Cost of electricity is twice as much as in India, China and Bangladesh and unemployment has risen sharply, leading to a significant spurt in the number of people falling into poverty. Trade deficit has jumped over 85% as against the same period last year. Current account deficit is widening and foreign reserves are dwindling. As per Pakistan’s central bank, the country’s total liquid foreign reserves, as of November 19, stood at $22.773 billion, declining $691 million in the same week. Recently, a World Bank report put Pakistan in the list of top ten nations with the largest foreign debts.
The situation has left Pakistan with little option but to seek loans to keep itself afloat. After initially rejecting its proposal to take loans up to 2% of its gross domestic product in a fiscal year, the International Monetary Fund, after weeks of negotiations, agreed to revive a $6-billion economic bailout. Saudi Arabia has also approved a loan of $3 billion, which will be held by Pakistan’s central bank for a year. These loans surely constitute a much-needed lifeline, but Pakistan should ask itself serious questions on why it has reached this sad state. More loans may also come in from China, but will be obviously at a cost. There is already a growing backlash against the China-Pakistan Economic Corridor and Pakistan surely doesn’t want to become a vassal state of China. Political protests are already picking pace against the state of economy across Pakistan. Despite the dire straits Pakistan finds itself in, Khan is still liked by many. He spent generously during the pandemic to keep Pakistan afloat and this has earned him much goodwill. Khan, famously known to single-handedly take Pakistan to glory on the cricket field, will need to do that all over again for his country. The way forward is to not just do the correct thing for the economy but in the political sphere too, by resetting Pakistan’s agenda and putting it on the path to progress and prosperity.
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