Pakistan Economy In Trouble

All it seems is not well in Pakistan. With its economy on a nose dive and International Monetary Fund (IMF) bailout not coming yet, the country’s Finance Minister Asad Umar had to step down. Though, Islamabad down played the event; the very fact, that the country’s Finance Minister had to resign before the Imran Khan led dispensation has completed even a year in office, reflects the way things are happening in Pakistan.

Islamabad has been pressing for a bailout of US$ 18 billion from the IMF. If approved, it would be the 13thconsecutive bailout from the international agency. Already Saudi Arabia, UAE and China have offered ‘soft loans’ of around US$ 10 billion to Pakistan. Analysts expect that it might take up to two months before the Washington based IMF grants a bailout, the figure could be well short of what Pakistan has been demanding. It has been speculated that the size of the bailout package could be between US$ 8 and 12 billion. There would be tough riders along the bailout.

Mr. Khan’s government is increasingly facing the wrath of the Pakistani public over rising prices of utilities, many of which have been subsidized by successive cash-strapped governments. Inflation in the country is close to 9.5 percent, the highest since November 2013. There has been heavy increase in prices of food items and energy; the two most sensitive items for most common Pakistani consumers.

After resigning, Mr. Umar said, “whoever comes in as Finance Minister now, will need to know the country’s economic position”. He added, “when we came in, Pakistan’s economy was going through its worst time in history; there were good and bad things but the bad were very bad.

The former Pakistan Finance Minister added the Pakistan Tehreek-e-Insaaf party government made some tough decisions to get out of the tough situation and saw some improvement. Mr. Umar however, cautioned that the new finance minister will have to deal with a different economy than what he had to deal with. The tough decisions that Mr. Umar has spoken of include further rise in the prices of food stuff and utilities. This has the potential to boomerang on the government. Already there have been country wide protests due the hike in the prices of essential commodities. The one million new employment opportunities, which was the election plank of Imran has not yet seen light of the day. ‘Naya Pakistan’, too, does not appear to be anywhere near the horizon.

Adding to the grim economic picture, Pakistan’s central bank has forecast a growth of around 4 percent, which is well short of the Imran Khan government’s target of 6.2 percent. The IMF however, has predicted Pakistani growth of 2.9 percent in 2019 and 2.8 percent in 2020.

Meanwhile, the intense social media war between Prime Minister Imran Khan and Pakistan Peoples’ Party (PPP) Chairman Bilawal Bhutto Zaradri provided comic relief to most Pakistanis this week. Mr. Khan had first described Africa as a country and then on an official visit to Iran this week, had remarked that Japan and Germany shared borders! Actually the Pakistan Prime Minister meant Germany and France shared borders. However, no correction to the slip of tongue was provided either by Mr. Khan’s office or the Pakistan Foreign Ministry. This led to a huge laughter challenge in Pakistan. The PPP Chairman, himself an Oxford University student, tweeted, whether Mr. Khan had got admission in the prestigious university on ‘cricket’ quota? Many Pakistanis felt embarrassed by Mr. Khan’s utterances.

It is hoped that turning the Pakistani economy around does not end up in another gaffe by Mr. Khan. His country seriously needs investments and creation of jobs. If this does not happen, the public angst is bound to rise. He should remember the jinx that no Pakistani Prime Minister till now has completed his or her tenure in office!

Script: Kaushik Roy, Air Strategic Affairs Analyst