Pakistan’s current economic situation has raised questions about whether the cash-strapped country can handle large-scale protests, as rising inflation makes the cost of living unbearable for its citizens, reports Asian Light International. Has been
According to the State Bank of Pakistan, the crisis-hit country’s current account deficit (CAD) declined by 90.2% to USD 0.24 billion in January from USD 2.47 billion in the same month last year.
Need to act fast to release Pakistan officials International Monetary Fund (IMF) bailout The package should not be such that people take to the streets in protest, which will eventually lead to social tension, anarchy, disorder and uncertainty which will make things more difficult.
As per the ANI report, the narrowing in the current account deficit was due to an unprecedented contraction in imports, indicating almost a standstill in industrial activity.
Many companies across all sectors have either shut down operations or reduced production levels, leading to layoffs. It is felt that it will be difficult for Pakistan to realize the projected GDP growth of 3.5% in the fiscal year 2023-24, reports Asian Light International.
Dawn pointed out that the decline in losses comes as import restrictions continue amid a balance of payments crisis that has brought the country to the brink of default.
Fahad Rauf, head of research at Ismail Iqbal Securities, said the narrowing current account deficit was “not an achievement but a result of low reserves,” the paper reported.
As per the latest data, PakistanThe current account deficit stood at USD 3.8 billion during the first seven months of the current financial year, which equates to a decline of 67.13% over the July-January fiscal 2021-22. As of 10 February, the Central Bank had only US$3.2 billion in reserves, barely enough to cover three weeks’ worth of imports.
To stem the outflow of dollars, the government has implemented sanctions, allowing imports of only essential food and medicines until a lifeline bailout is agreed with the International Monetary Fund (IMF). Which is considered essential by default for the country, reported Asian Light International.
Pakistan relies heavily on remittances for its foreign exchange reserves in addition to exports and external debt. But it is a matter of concern that there has also been a decline in exports, which stood at USD 2.21 billion in January, down 4.29% from USD 2.31 billion in the previous month, reported ANI.
Situation like economic collapse in Pakistan Economic mismanagement has resulted from a combination of factors including political uncertainty, natural disasters, rapidly rising inflation, high energy prices and urgent foreign debt payment obligations.
People are facing rising prices of essential commodities like wheat flour 100/150 PKR per kg, milk Rs 250 per liter and chicken Rs 780 per kg. In contrast, removal of subsidies as well as increase in taxes are pushing energy prices to all-time highs. Such opportunities have been fertile ground for military acquisitions in the past, reports Asian Light International.
Earlier this month, the Pakistan government and IMF staff completed the ninth review of the $6.5 billion bailout package without staff-level agreement. The Pakistani government hoped that they would be able to convince the IMF to gradually introduce conditions. However, Islamabad’s hopes were dashed during the IMF mission’s 10-day visit to Pakistan.
(With ANI inputs)
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