By KS Tomar
Pakistan is poised to go in Sri Lanka’s way of economic collapse. The reasons are innumerable and similar like walking into the debt trap of China, political turmoil, reckless defense spending including terror funding, inflation touching unimaginable height of 23 percent, decline of foreign reserves to the lowest level of $2.9 billion, irrational loans procured from international agencies without bothering to repay even installments, anti-American attitude leading to alienation in the west, etc.
According to reports, “The IMF and Pakistan signed a $6 billion bailout in 2019, which was topped up with another $1.1 billion last year, but that came with conditions attached, aimed at reducing the budget deficit before the loan is released.” Experts say that the United States and its allies wield a lot of influence over the IMF but Pakistan has alienated the west after falling into the debt policy of China.
In a related development, Pakistan’s finance minister, Ishaq Dar made it clear that IMF pre-conditions are being fulfilled hence a finance bill has been adopted to impose new taxes of PKR 170 billion, which is expected to reduce the fiscal deficit. Dar met a visiting U.S. Treasury and told them that Pakistan would honor its international commitments and Pakistan is in the process of taking very tough decisions including increasing natural gas and electricity prices.
However, Indian foreign minister S Jaishankar lambasted Pakistan on its economic crisis saying, “No country will ever come out of a difficult situation if its basic industry is terrorism.” He also added that it is in nobody’s interest if a neighboring country plunges into a serious economic crisis but it is mandatory for such nations to make policy choices and governance decisions to come out of such a mess.
Experts in Pakistan feel that with interest rates already at 17%, inflation hitting 24.5% in Dec 2022, and foreign reserves barely sufficient to cover three weeks of imports, Pakistan is in dire need of external financing. The IMF is delaying the unlocking of the next tranche of $6.5 billion.
On the Hunger index, Pakistan ranks 99 out of 121 nations and faces a threat of civil war as even milk is being sold at Rs70 per liter, and wheat flour at Rs85 per kg. This indicates that Pakistan is inching towards starvation.
In this complex scenario, it will be a miracle if Pakistan escapes from financial collapse and meltdown. Despite suffering of people due to homegrown terrorism, recent floods and now economic crisis, Pakistan continues to nurture terrorism at the cost of its people. It is also an opportunity for the west to set things right in Pakistan as they are also now victims of extremism propagated by this failing country.
Profile: KS Tomar is a senior columnist based in Shimla, India.
