The Imran Khan-led government doled out discretionary funds to the tune of Rs 142 billion through the ruling party’s parliamentarians and the cumulative effect of its economic misgovernance was that public debt jumped to Pakistan Rupees (PKR) 42.8 trillion by this February, which is more than the liabilities, reported the think tank.
According to a research tank, Policy Research Group, Pakistan’s sinking economy needs to be fixed to erase the harm left behind by the “player-playboy-turned-Islamist in democrat’s clothing Imran Khan” at the end of his three-and-a-half-year misrule (POREG). According to an opinion post published in POREG by James Crickton, the Saudi Royal family’s promise of USD 8 billion in help pledged during Prime Minister Shehbaz Sharif’s visit to the kingdom may provide Pakistan some breathing room, but it is insufficient to resuscitate the country’s stagnant economy. Notably, the former Imran Khan-led government continued Pakistan’s tradition of using loans to fend off immediate problems by rushing around asking other countries for assistance, but this simply weakened the economy further.
Moreover, the fiscal deficit is projected to increase to 6.3 per cent of GDP, the Current Account Deficit is expected to widen to 4.4 per cent during the current fiscal. According to the World Bank, rising food and energy prices in Pakistan are expected to diminish the real purchasing power of households, disproportionally affecting the poor and vulnerable, that spend a larger share of their budget on these items.
The gravity of the situation can be demonstrated by the fact that the world’s second-largest Muslim country with a population of almost 227 million has diesel stocks that can last for just 18 days at the best. Pakistan Finance Minister under the Shehbaz Sharif administration, Miftah Ismail, held a round of exploratory package talks with the International Monetary Fund, following which, the fund agreed to send a team to Islamabad this month to discuss the revival of the Extended Fund Facility (EFF).
However, the long-standing structural challenges still remain that pose a risk to the country’s sustained growth. Further, the domestic political uncertainty and policy reform slippages can lead to protracted macro-economic imbalances, according to the think tank. In the last three years, Pakistan’s foreign debt increased at a pace of 90 per cent to PKR 15.1 trillion largely due to currency depreciation and building foreign currency reserves through borrowing.
Increasing debt servicing obligation, the holy cow of defence even though security concerns are not with neighbours but over pampered terrorists and the failure to mop up taxes and levy additional revenues has widened the gap between expenditure and revenue in the country. According to the World Bank forecasts, the real GDP growth of Pakistan will moderate to 4.3 per cent in this fiscal and slow down to four per cent in the fiscal year 2023, and thus the economy needs fixing in the near, short and long term, according to the think tank.
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