Posts tagged: IMF

Introduction: New Year

The Pakistani nation is stepping into the New Year with what prospects and concerns in terms of economic, political, social and other aspects, this is certainly an important question of today. A correct understanding of the facts and appropriate measures can be a means of positive change in the situation, while if the path of awareness is not taken, the quagmire of problems must deepen.

For this, it is necessary to keep the background of the current situation in mind. This fact is now as clear as day that the main cause of the current economic and political crisis of the country was the campaign launched by powerful figures associated with some state institutions against the constitutional government established after the 2013 elections for their own specific agenda, which is the national economy caused to derail.

After that, during the government established with the full support of the state institutions, the economic crisis became more severe and the country came close to bankruptcy. After the end of this period, the coalition government was established, which saved the country from default by accepting the very strict conditions of the IMF, but the economic crisis continued to increase. According to a recent review, at the end of the last fiscal year, Pakistan entered into a new short-term standby agreement of $3 billion with the IMF, but this arrangement brought a storm of inflation, tightening of fiscal policies, negative growth and today, the weekly rate of inflation has reached 43%.

Under the IMF program, a one-size-fits-all policy has been adopted and the country has been plunged into a vicious cycle in which fiscal expansion has become a major cause of problems. The need to increase financial resources is increasing inflation, which is further tightening the financial position, while debt servicing has become the largest expenditure item and there is no easy way out of this vicious cycle.

The review highlights the fact that Pakistan’s economy has been continuously declining for a decade and a half, but after the Panama case came to light in 2016, the economic foundations of the country started to weaken day by day. This journey of decline can also be measured by the fact that when the Muslim League (N) government of 2013-18 ended, the total government debt and liabilities of the country at that time was 298 trillion rupees, while in September 2023, these expenses had increased to 780 trillion rupees and now at the end of 2023, these government expenses are touching the mark of 800 trillion.

In spite of these difficulties, the establishment of the Special Investment Facilitation Council proposed by Army Chief General Asim Munir during the previous coalition government and through its efforts to attract serious investment from friendly countries in the fields of agriculture, minerals, energy and IT has not only brightened the prospects of recovery of the national economy, but its positive results in the form of contracts worth tens of billions of dollars have also started to emerge, the value of the rupee has improved, new life is seen in the stock exchange, which investors are looking forward to.

It is a clear manifestation of confidence, but to continue this trend, the end of political uncertainty and the establishment of an elected constitutional government through a transparent election process, is indispensable.

Due to political chaos, terrorism, the problem of missing people, the public anxiety that has been going on for years is very harmful for the country. In order to control these factors, political parties and state institutions have to establish an atmosphere of understanding together, only then will it be possible to prevent concerns in the New Year and realize the happy prospects of the future.