Pakistan is in a dire economic situation. The country has gone to the International Monetary Fund (I…
By Pakistan is in a dire economic situation. The country has gone to the International Monetary Fund (IMF) for its 13th bailout since the late 1980s.[0] High levels of external debt, runaway inflation, depreciating currency, and plummeting foreign exchange reserves have all contributed to the crisis. The country is also facing a major security challenge from the Tehreek-e-Taliban-e-Pakistan (TTP) terror organization, along with a debilitating balance of payments crisis.[1]
The inflation rate has soared, reaching its highest level in 48 years, making it difficult for people to buy essential items.[0] Pressure is mounting on the government to avert national bankruptcy, with no other avenues of bailout available. It is essential that the IMF visit in order to address the economic crisis and determine the future of the nation. Total debt and liabilities have reached PKR 59,697.7 billion (89% of the GDP).[2] Of the total bilateral debt owed by Pakistan, China accounts for 35%.[3]
In Pakistan's major cities, such as its economic hub Karachi, long lines of vehicles can be seen at gas stations.[4] [5] Prime Minister Shahbaz Sharif's government is now facing a difficult task to convince the IMF to renew its loan for the country to avoid a default.[6]
Pakistan has experienced two significant blackouts in recent years — a nine-hour blackout in 2018 and an 18-hour blackout in major cities in 2021.[7] Such crises have not only impacted daily life, but also the economy — the most recent incident resulted in an estimated loss of PKR 100 billion (equivalent to USD 380 million).[8]
Overall, Pakistan is grappling with a severe economic crisis and a deteriorating security situation. With no other options for a bailout, the IMF visit is seen as crucial in addressing the crisis and determining the future of the country. The government is under pressure to prevent national bankruptcy, with the debt servicing obligations for 2023 estimated at USD 15.5 billion. It remains to be seen if the IMF will be willing to lend a helping hand.
0. “Pakistan Economic Crisis: Can IMF Intervention Avert National Bankruptcy?” ap7am, 5 Feb. 2023, https://www.ap7am.com/lv-370535/
1. “Pakistan's Internal Turmoil | MENAFN.COM” MENAFN.COM, 2 Feb. 2023, https://menafn.com/1105517755/Pakistans-Internal-Turmoil
2. “Why Pakistan’s economy is collapsing? Explained in charts” The Hindu, 9 Feb. 2023, https://www.thehindu.com/data/data-why-pakistans-economy-is-collapsing-explained-in-charts/article66482716.ece
3. “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
4. “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
5. “Is Pakistan's economic collapse imminent?” Taiwan News, 2 Feb. 2023, https://www.taiwannews.com.tw/en/news/4798325
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. “What's at Stake in Pakistan's Power Crisis” Council on Foreign Relations, 6 Feb. 2023, https://www.cfr.org/in-brief/whats-stake-pakistans-power-crisis
8. “Pakistan suffers widespread power outages amidst financial crisis” Global Voices, 3 Feb. 2023, https://globalvoices.org/2023/02/03/pakistan-suffers-widespread-power-outages-amidst-financial-crisis/
