Pakistan’s Dire Economic Crisis: With Inflation at a 48-Year High, Can a Bailout Save the Country?
Pakistan is facing an unprecedented economic crisis as it struggles with high levels of external debt, a deteriorating security situation, and a looming default.[0] With inflation at a 48-year-high, citizens are struggling to afford basic necessities, and the government is under pressure to prevent national bankruptcy.[0] Prime Minister Shehbaz Sharif’s government is attempting to negotiate a bailout from the International Monetary Fund (IMF), but experts fear it may not be enough to avoid a crisis.
Pakistan’s current debt stands at $247 billion, 97% of its GDP.[1] It is estimated that the country needs at least $8 billion to avoid default, but its reserves are only enough to cover three weeks of imports. Despite taking 14 loans from the IMF since the late 1980s, none of them have been fully returned, raising questions about the government’s capability to recover from this dead-end.[2]
The IMF has set tough conditions, and China, Saudi Arabia, and the UAE have only committed to some relief.[3] The recent terror attack in Peshawar, combined with the US withdrawal from Afghanistan, has further increased security concerns, damaging the country’s relations with the Taliban government in Afghanistan.[4]
The economic situation has caused major issues for Pakistan, with political instability and efforts to prop up its currency weighing on investment and exports.[5] Long queues of cars can be seen outside gas stations, with a shortage of fuel and whatever gas is available being too expensive for many citizens to afford.[6]
Experts fear that unless China or Saudi Arabia come up with a substantial bailout package, Pakistan may face a disaster like never before.[2] The IMF loan may help improve the balance of payment, but it will also unleash a storm of inflation that could spike up to 40-50%.[7] Those living below the poverty line, around 30-40% of the population, will suffer the most.[7]
Pakistan is in desperate need of a bailout, but with limited options and no substantive commitments, the future of the nation is uncertain. With the economy on the brink of collapse and security challenges intensifying, only time will tell what the future holds for Pakistan.
0. “Pakistan Economic Crisis: Can IMF Intervention Avert National Bankruptcy?” ap7am, 5 Feb. 2023, https://www.ap7am.com/lv-370535/
1. “Faulty policies, funding of terrorism responsible for Pakistan's economic crisis: Report” Devdiscourse, 5 Feb. 2023, https://www.devdiscourse.com/article/international/2343547-faulty-policies-funding-of-terrorism-responsible-for-pakistans-economic-crisis-report
2. “Pakistan in worst economic crisis since formation, faces massive disaster” msnNOW, 9 Feb. 2023, https://www.msn.com/en-in/news/world/pakistan-in-worst-economic-crisis-since-formation-faces-massive-disaster/ar-AA17hIBK?li=AAggbRN
3. “Pak grappling with economic, political crises” The Tribune India, 9 Feb. 2023, https://www.tribuneindia.com/news/comment/pak-grappling-with-economic-political-crises-477890
4. “Pakistan’s Internal Turmoil” Kashmir Observer, 2 Feb. 2023, https://kashmirobserver.net/2023/02/02/pakistans-internal-turmoil/
5. “Blackouts and soaring prices: Pakistan's economy is on the brink -” KTEN, 2 Feb. 2023, https://www.kten.com/story/48296303/blackouts-and-soaring-prices-pakistans-economy-is-on-the-brink
6. “Is Pakistan's economic collapse imminent?” DW (English), 2 Feb. 2023, https://www.dw.com/en/is-pakistans-economic-collapse-imminent/a-64587974
7. “World News | Instead of Fixing Economy Pak Politicians Embroiled in a Tug-of-war: Report” LatestLY, 4 Feb. 2023, https://www.latestly.com/agency-news/world-news-instead-of-fixing-economy-pak-politicians-embroiled-in-a-tug-of-war-report-4795452.html
