Pakistan’s economic crisis is deepening amid rising political and security uncertainty. Though the country managed to avert a default earlier this month, the challenges on the economic front are multiplying with foreign exchange reserves dipping below $7 billion. The fear of bankruptcy is only growing.
The country will find it tough to manage a debt repayment of over $30 billion this fiscal year.
Pakistan’s benchmark KSE 100 lost more than 1,100 points today reflecting a panic-like situation among investors.
According to local newspaper Dawn, Dalal Securities CEO Siddique Dalal said the index fell due to a number of reasons, including fear of the dissolution of Punjab and Khyber Pakhtunkhwa assemblies and rising political confrontations which had damaged investor confidence.
Besides, the delay in the International Monetary Fund’s ninth review for the loan programme that was resumed in August is one of the major factors that has led to the crash.
Pakistan, which had begun the process of eliminating untargeted subsidies under its former Finance Minister Miftah Ismail, is once again back on the course doling out money to various sectors.
Islamabad has reduced petrol and diesel prices by (Pakistani) Rs 10 and Rs 7.5 respectively.
“As general elections approach, the Shehbaz Sharif government may just announce more such programmes..in fact the Imran Khan government came under criticism for boosting the freebies culture but this government has done nothing to alter that bringing Pakistan close to bankruptcy,” an analyst told India Narrative.
As the country is now practically surviving on borrowed money, its fiscal space to invest in developmental sectors has diminished, leading to concerns among citizens.
The spotlight is now on Pakistan’s Finance Minister Ishaq Dar who took charge in September.
“By bringing in Dar as finance minister, the PML-N has made a catastrophic mistake that will blow away what little political capital the party has. Perhaps that is a fair and deserved outcome for a party that has imposed an irrational actor on Pakistan and whose actions are unleashing chaos on Pakistan’s teetering economy.