In its Global Crisis Risk Report, the World Economic Forum fears that Pakistan’s institutions will be inactive and perjured within two years…reports Asian Lite News
Pakistan, which is due to receive USD 10 billion payout in coming months amid its faltering economy, is in soup over its shoddy past of corruption, reported Islam Khabar.
The burning question is — given the generous donation of the international community, will Pakistan be able to redeem itself or default again and remain a global joke? Its leaders are rejoicing as the country steps into its 23rd IMF programme and the ruling class is boasting of the achievement, as if begging for money accounts for economic growth, stated the report.
In its Global Crisis Risk Report, the World Economic Forum fears that Pakistan’s institutions will be inactive and perjured within two years, reported Islam Khabar.
The rich will flee to their secure hamlets abroad and the poor will be left behind to pay off the accumulated debt, the report said, adding that the treasury is already empty.
Further, according to the report, the political tug of war has the flood victims on the brink of death and the rest of the nation in severe crisis.
PM Shebaz Sharif declared the international donors’ conference in Geneva a ‘success’ and promised that every rupee pledged will account for flood victims as if somehow this will redeem his respect and goodwill among the public.
However, farmers swimming in the worst-hit areas of Sindh find it hard to believe that they would receive “even one rupee” of what is promised, reported Islam Khabar.
The rulers are already trying to bank votes in the name of these funds that are only pledged, not delivered, fooling people. They are building castles in the air, giving them hope for the money which will be remitted over three years, not immediately, the report stated.
For donors such as the Islamic Developmental Bank, which pledged USD 4.2 billion, pledge does not oblige them to commit a huge sum of money as it is not an agreement, the report said.
This fact and many such conditions on the USD 10 billion pledged, is probably a minuscule detail for the political leaders who have left out this information as it doesn’t benefit their agenda, reported Islam Khabar.
Speaking to a national daily, former Finance Minister Miftah Ismail claimed that the “government is not only forcing us further into a debt trap but risks defaulting on repayment”.
Pakistan already owes the world about USD 100 billion, USD 21 billion of which is due to be repaid to the creditors in this fiscal.
As 2023 unfolds, the nation is bound to repeat the vicious cycle of borrowing from one creditor to pay off another, only to buy more time to pay the original amount while slowly driving itself off the cliff, reported Islam Khabar.
Over the past three days, owing to a major power breakdown in major cities of Pakistan including Karachi, Lahore, Islamabad, and Quetta, the status of citizens has been reduced to that of animals and insects fighting on the streets for a morsel of bread braving the cold, the report read.
Reportedly 90 per cent of Karachi is without power.
People are running wild stealing wheat and pulses owing to inflation, the report said, adding that flour is disappearing from the storage hideouts where it was held to fetch higher prices in ignorance of the hungry population.
It wouldn’t come as a surprise if national-level riots hit the streets tomorrow calling out fake promises of the unpopular government, reported Islam Khabar. (ANI)
No way out?
British publication Financial Times has warned that Pakistan’s economy is at risk of collapse with the government’s “failure to revive” an International Monetary Fund (IMF) deal, Geo News reported.
According to the report, rolling blackouts and a severe foreign currency shortage are making it difficult for businesses to continue operations.
Shipping containers full of imports are piling up at ports as the buyers are unable to secure the dollars to pay for them, it added, Geo News reported.
“Associations for airlines and foreign companies have warned that they have been blocked from repatriating dollars by capital controls imposed to protect dwindling foreign reserves. Officials said that factories such as textile manufacturers were closing or cutting hours to conserve energy and resources. The difficulties were compounded by a nationwide blackout on Monday that lasted more than 12 hours,” reported the UK newspaper.
“Already a lot of industries have closed down, and if those industries don’t restart soon, some of the losses will be permanent,” said the founder of Macro Economic Insights, Sakib Sherani, Geo News reported.
Citing analysts, Financial Times reported that Pakistan’s economic situation is “becoming untenable”, and maybe in a similar situation as Sri Lanka if the situation persists. The publication also warned that if the “situation persists” then the country may default in May.
“Every day matters now. It’s simply not clear what the way out is,” said Abid Hasan, a former advisor to the World Bank, adding, “Even if they get a billion [dollars] or two to roll over, things are so bad that it’s going to be just a band-aid at best.”
Pakistan’s Planning Minister Ahsan Iqbal told the FT that the country has “drastically” reduced imports in an attempt to conserve dollars.
“If we just comply with the IMF conditionalities, as they want, there will be riots in the streets. We need a staggered programme… The economy and society cannot absorb the shock or cost of a front-loaded programme,” Iqbal said.
Following the Pakistani rupee’s devaluation in the open and interbank markets, the benchmark index of the Pakistan Stock Exchange (PSX) rallied and gained by more than 1,000 points, Geo News reported.
Commenting on the development, Arif Habib Limited’s Head of Research, Tahir Abbas, said that the rupee’s steep fall has triggered a positive sentiment in the market.
“The driving factor behind the market is the rupee’s market-based exchange rate. This has helped clear the uncertainty that was surrounding the investors,” Abbas said, Geo News reported.
The analyst said that the government’s steps are helping the market recover and increasing the confidence of the investors – who were in a difficult position due to the uncertainty over the revival of the International Monetary Fund’s (IMF) programme.
Abbas added that with a mini-budget expected within the next eight to 10 days, the tariffs of gas and electricity might also witness an increase and more taxes might be be imposed – also the global money lender’s conditions.
The Pak rupee posted its biggest single-day decline against the dollar in more than two decades, after rapidly depleting foreign exchange reserves and an unyielding IMF forcing the government to relax its grip on the currency, The News reported.
Following the government’s decision to end its control over the rupee-dollar exchange rate as part of the IMF condition, the Pak currency slid 9.61 per cent, or Rs 24.5, to a record low of Rs 255.43 against the US dollar compared to Wednesday’s close of Rs 230.89.
The over 9 per cent decline was its highest since October 30, 1999, when the currency had slumped 9.4 per cent.
“The State Bank of Pakistan is seemingly adjusting the exchange rate to the market rate – closer to open market to address the widening difference between the official and open market rate and to curb the flow of dollars through the informal market,” said Saad Ali, a capital market expert, The News reported.