Islamabad [Pakistan], March 21 (ANI): Problems for financial crisis-ridden Pakistan are likely to aggravate in near future due to the constant political upheavals that the country is witnessing. Policy paralysis and political slugfest are evident though people in Pakistan are dying due to hunger, and fleeing the country due to debt stress.
The political drama over the arrest of former prime minister Imran Khan has given a clear idea about the priority of Pakistan's policymakers when the country is struggling with economic downfall. It appears Pakistan gets stuck in a severe political crisis as the country approaches the national election this year, which would ultimately make irreversible damage to the frail economy.
There were high hopes for Pakistan and its democracy when it saw a peaceful transition of political power in 2013 and 2018. However, normalcy could not last for long after that. A power tussle ensued between Imran Khan-led civil government and Pakistan's powerful army. Since Khan's government was pulled down, allegedly, with the support of the army, and a new government formed by an unwieldy multi-party coalition in April 2022, Pakistan has been witnessing an unstable political environment. The country has also been hit by unprecedented flood damage even as resisting violent attacks from extremist forces.
Pakistan's economy has become too weak and people are struggling to earn livelihoods. The floods in 2022 made the situation worse and put the country on the verge of bankruptcy. No international funding agency or foreign nation allies are agreeing easily to extend financial assistance and loans to Pakistan now. Pakistan's exports are declining and foreign reserves are shrinking. All this puts Pakistan in a very precarious situation. Pakistani economists said the country's economy was on a "suicidal path" as the Islamabad government was pursuing the wrong policies.
The financial situation of Pakistan is in very bad shape--the worst in the past five decades. Its external debt servicing has risen by 70 per cent in the first two quarters of 2022-23, forex reserves dropped by USD 3 billion, the fiscal deficit decreased by 43 per cent while inflation surged to a whopping 38 per cent. Pakistan is struggling to get bailout packages and loans from the international community. The delays from the International Monetary Fund (IMF) in getting critical funding have added to Pakistan's economic downfall. Pakistan's currency hit a record low of PKR 284 per US dollar in March.
Its traditional funder countries such as Saudi Arabia, and Iran have refused to provide any easy financial assistance, thus frustrating the Pakistan government, said Umar Karim, associate fellow at the Riyadh-based King Faisal Center for Research and Islamic Studies. "While previously Saudi Arabia and other Gulf countries would bail Pakistan out off the back of a phone call from the foreign minister or the prime minister, this time around they are really being put through the mill," he said.
Hitting the panic button, Pakistan has secured USD 2 billion in loans from China, which put it at risk of default.
Pakistan's politics witnessed a high level of instability when Imran Khan was ousted. Since then, there has been growing political uncertainty thanks to frequent protest rallies by Khan's supporters, who called the incumbent government corrupt and illegal. Later, Khan was attacked, which left him wounded. Now, he is being tried on different charges, leading to the chances of his arrest.
Now, foreign minister Bilawal BhuttoZardari is threatening to quit from the coalition government, which would lead to political complications. Khan now is pressurising the federal government to hold elections soon. He said if early elections are not held, "the country will slip out of our hands."The political, fiscal, and humanitarian crises have brought Pakistan to the brink of collapse, along the lines of debt-laden countries like Sri Lanka and Ghana. Yet, the country's elites and policymakers seem to prioritize political gains over the welfare of the masses and the economic stability of the country.
"What makes the crises in Pakistan today extremely worrisome is the domination of the political crisis over all other challenges and the resulting distraction from finding solutions to the more important economic and security issues," said Ahmed Bilal Mehboob, president of the think tank Pakistan Institute of Legislative Development And Transparency. (ANI)