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Pakistan's economy is in crisis.

 Prime Min­is­ter Shehbaz Sharif on Tues­day expressed his «sin­cere regrets for the incon­veni­ence» and

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said an inquiry would determ­ine the cause. «Already a lot of indus­tries have closed down, and if those indus­tries don’t restart soon, some of the losses will be per­man­ent,» said Sakib Sher­ani, founder of Macro Eco­nomic Insights, a con­sultancy in Islamabad. Ana­lysts warn that the eco­nomic situ­ation is becom­ing unten­able, and Pakistan is at risk of fol­low­ing Sri Lanka, where a lack of for­eign reserves triggered severe short­ages of essen­tial goods and led to a default in May. Islamabad’s for­eign reserves have dropped below $5bn, less than enough for a whole month of imports, and Sharif’s gov­ern­ment remains in a dead­lock with the IMF over resur­rect­ing a $7bn assist­ance pack­age that stalled last year.

Ahsan Iqbal, plan­ning min­is­ter, told the Fin­an­cial Times that Pakistan had reduced imports «drastic­ally» in an attempt to con­serve for­eign cur­rency. Pakistan is still reel­ing from dev­ast­at­ing floods last year, which affected tens of mil­lions of people and caused dam­age estim­ated at $30bn. Sharif’s gov­ern­ment has said it is com­mit­ted to reviv­ing the IMF deal to unlock the next tranche of funds. But the sides remain at odds over the IMF’s demand that Pakistan accepts eco­nomic reforms, such as rais­ing sub­sid­ised energy prices.

Islamabad argues that push­ing through pain­ful aus­ter­ity meas­ures, while it is recov­er­ing from the floods, is imprac­tical.

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  1. Edgar26 January 2023 at 10:25

    The IMF has a point and Pakistan also has a point. The problem is it takes way too much time for them to come to an agreement and it's possible that by the time they do, it will be too late for the country.

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    1. Sam26 January 2023 at 13:08

      Pakistan is going to be worse than Sri Lanka because they have more people. It will be horrible and it will happen this year. I don't see any way of them coming back from this. Things are just way too bad now.

      Delete

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