Pakistan’s economic crisis continues to worsen as the country struggles to cope with mounting debt, inflated energy import costs, dwindling forex reserves, global inflation, political instability and a sustained drop in GDP growth. For the government, it is now a race against time to prevent the nation from a complete economic collapse, which could severely impact millions of citizens.
Such is the extent of the crisis that the government auctioned a Pakistani embassy property in the US a few days ago. The government is even resorting to drastic measures like ordering shopping malls, restaurants, wedding halls and markets to shut down early, hoping that it would save the nation around $273 million or 62 billion Pakistani rupees towards energy imports.
Among other moves, all government departments in the country have been asked to reduce electricity consumption by 30 per cent. While Pakistan’s economy has been out of shape consistently for the past few years, the cash-strapped nation’s financial problems further aggravated in 2022.
In fact, the flood increased Pakistan’s dependence on imported goods other than oil, while the country’s exports slumped. According to the Pakistan Bureau of Statistics, the country’s trade deficit stood at over $2.8 billion in December 2022 as exports declined by over 16 per cent to $2.3 billion. A depreciating currency isn’t helping the economic situation either, with the Pakistani Rupee falling nearly 30% in 2022, compared to the US dollar.
A Reuters report stated that Pakistan has to meet external financing needs to the tune of over $30 billion up until June 2023, including energy and debt repayments – an impossible feat considering the country’s sluggish GDP growth, which the World Bank has pegged at just 2 per cent.
In addition to slow growth, Pakistan is also facing skyrocketing inflation that could rise up to 23 per cent in FY23. Slower growth and rising inflation could prove to be a dangerous combination for the nation of approximately 220 million people, where getting a job is getting harder by the day. A recent video uploaded on social media showed 30,000 people showed up at a stadium in Islamabad for a constable recruitment drive to fill 1,167 vaccancies.
While the Pakistan government’s drastic measures to save energy costs can provide some breathing space, it is not enough to deal with the cocktail of economic woes plaguing the country at the moment. The only hope that the country has is the release of the $1.1 billion IMF bailout tranche that has been delayed due to a pending review.
Such is the extent of the crisis that the government auctioned a Pakistani embassy property in the US a few days ago. The government is even resorting to drastic measures like ordering shopping malls, restaurants, wedding halls and markets to shut down early, hoping that it would save the nation around $273 million or 62 billion Pakistani rupees towards energy imports.
Among other moves, all government departments in the country have been asked to reduce electricity consumption by 30 per cent. While Pakistan’s economy has been out of shape consistently for the past few years, the cash-strapped nation’s financial problems further aggravated in 2022.
In fact, the flood increased Pakistan’s dependence on imported goods other than oil, while the country’s exports slumped. According to the Pakistan Bureau of Statistics, the country’s trade deficit stood at over $2.8 billion in December 2022 as exports declined by over 16 per cent to $2.3 billion. A depreciating currency isn’t helping the economic situation either, with the Pakistani Rupee falling nearly 30% in 2022, compared to the US dollar.
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