Islamabad: Pakistan, facing a mammoth economic crisis, is reeling under inflationary pressure and a shortage of even basic goods like food and medicine and its economy is being kept afloat by the financial assistance of the international community, reported Al Arabiya Post.
The international community’s generous response by pledging more than USD 8 billion comes as a great relief for cash-strapped Pakistan which is fighting to rebuild in a climate-resilient manner after the devastating floods that killed 1,739 people and affected 33 million people last year. At the opening session of the ‘International Conference on Climate Resilient Pakistan’ in Geneva, which was co-hosted by United Nations Secretary-General Antonio Guterres and Pakistan Prime Minister Shehbaz Sharif, it sought USD 8 billion assistance from international donors over the next three years on January 9.
The break-up of the committed assistance shows that Islamic Development Bank contributed the largest USD 4.2 billion, followed by World Bank (USD 2 billion), the Asian Development Bank (USD USD 1.5 billion), France (USD 345 million), China and USAID contributing USD 100 million each, the European Union (USD 93 million) and Japan (USD 77 million). A total of USD 8.75 billion had been pledged so far, reported Al Arabiya Post.
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However, many analysts argue that floods are a recent happening and the economic crisis could not be attributed only to this natural disaster. Islamabad has been mismanaging its economy for long.
Its populist regime of subsidies and doles despite sluggish growth and worsening revenues has increased the budgetary burden and fiscal deficit. The external debt of Pakistan also mounted over the years due to its mega projects under the CPEC, many of which were not feasible economically while some others are facing delays and cost overruns.
The country owes almost one-third of its external debt to China, which is facing criticism for its debt trap diplomacy globally. The Pakistan regime has always ignored the people of the country while spending huge amounts of money on acquiring military equipment.
It should have a ceiling on military expenditure and urgently resort to a transfer of money from the acquisition of arms, ammunition and military equipment to rebuilding an economy mismanaged and wrongly prioritized for long, reported Al Arabiya Post.
Pakistan is reeling under double-digit inflation with its consumer price index rising to 24.5 per cent in December 2022. Cost of food in Pakistan increased 35.5 per cent year-on-year during the same month higher than 31.1 per cent the previous month. The essential food items’ prices have soared beyond the affordability of the common man with onions recording a price rise of 43 per cent, tea 63.8 per cent, wheat 57.3 per cent, eggs 54.4 per cent, gram whole 53.2 per cent and rice 46.6 per cent.
Pakistan is facing one of the worst flour crises due to a shortage of wheat flour, pushing the price of wheat in Khyber Pakhtunkhwa, Sindh and Baluchistan to PKR 150/Kg. There are reports of stampedes due to the rush toward government booths supplying subsidized flour.
The massive decline in foreign exchange reserves has left no space for Islamabad to repay its external debt without moratorium or assistance. The State Bank of Pakistan’s (SBP) reserves hit USD 5.576 billion by the end of December 2022, which means last year Pak foreign exchange was depleted by USD 1 billion.
As of January 2023, the Public Debt of Pakistan was around PKR 62.46 trillion (USD 274 billion) which is nearly 79 per cent of the GDP of the country, reported Al Arabiya Post.
(Except for the headline, this story has not been edited by HW News staff and is published from a syndicated feed.)
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