Lagatar24 Desk
Islamabad, Jan 31: As IMF representatives visit Pakistan to discuss a crucial cash infusion, the rupee is falling, inflation is skyrocketing, and there is a shortage of energy. Pakistan is currently experiencing a huge economic crisis.
In order to avoid backlash before the upcoming elections in October, Prime Minister Shehbaz Sharif resisted the tax increases and subsidy cuts demanded by the International Monetary Fund for months.
However, Islamabad has begun to yield to pressure in recent days as the threat of national insolvency grows and no friendly nations are willing to offer less painful bailouts.
To rein in a rampant black market in US dollars, a step that caused the currency to plunge to a record low, the government loosened controls on the rupee. Artificially cheap petrol prices have also been increased.
“We’re at the end of the road. The government has to make the political case to the public for meeting these (IMF) demands,” former World Bank economist Abid Hasan told AFP.
“If they don’t, the country will certainly default, and we’ll end up like Sri Lanka, which will be even worse.”
Last year, Sri Lanka went into debt default and experienced months of food and fuel shortages that led to unrest and finally forced the nation’s government to depart the country and resign.
Time is of the essence in Pakistan, according to Nasir Iqbal of the Pakistan Institute of Development Economics, who warned that economic mismanagement and political unrest had caused the country’s economy to ‘nearly collapse’ already.
Notably, a team from IMF arrived in Islamabad to discuss the ninth review of the USD 7 billion Extended Fund Facility, which will start today, ARY News reported.
Pakistan, which has been reeling under the drastic repercussion of deadly floods in 2022, is facing one of the worst crises hit since its independence. Pakistan PM Shehbaz Sharif in January 2023 openly sought financial support from international communities and said Pakistan required a huge sum of $30 billion to recover from the floods.
Currently, the world’s fifth-biggest population has less than $3.7 billion in the state bank, sufficient only to cover just three weeks of imports.
The industry has been hammered by the imports block and massive rupee devaluation. Public construction projects have halted, textiles factories have partially been put away and domestic investment has slowed.
