Does Pakistan have No Money for the Upcoming Elections? 10 Worrisome Economic Indicators
(CTN News) – Pakistan’s economy has been downward since losing a war with India and being divided from Bangladesh in 1971.
Several indications show that the nation is now facing its worst nightmare. There is a significant lack of food, electricity, medication, and other necessities for everyday people.
According to Hafiz Hamdullah, spokesperson for the Pakistan Democratic Movement (PDM), the next elections would be postponed if the economy does not improve, according to reports in Pakistani media.
How bad is the situation there, then? These economic measures might provide some insight.
Forex Exchange at 9 year-low
According to a report by Geo News, Pakistan’s foreign exchange hit a record low of $ 4.56 billion, which is only enough to pay for imports for three weeks.
For a nation that relies significantly on imports, the situation is disastrous. According to reports, the decrease in money results from two banks in the UAE having to repay commercial debts totaling USD 1 billion.
Fiscal deficit 43%
According to a study on Pakistan Revenue, which used official data made available by the ministry of finance, Pakistan’s budget deficit increased by 43 for the July to September 2023 quarter.
It explained that the country’s budget deficit for the first quarter of the current fiscal year was 1% of GDP, up from a deficit of 0.7% in the same period of the previous fiscal year.
Prices have skyrocketed
According to Pakistani media, the Sensitive Price Indicator (SPI), which measures the price of sensitive goods, rose 32% Year on Year (YoY) for the week ending January 19, 2023.
Meanwhile, many predict another 100 basis point increase to raise the benchmark rate to 17%.
Wheat Prices pushing up inflation
Pakistan is significantly dependent on imports, particularly from Russia and Ukraine, to meet its needs for vital food items.
Pakistan imported $1.01 billion worth of wheat from the two countries before the start of the conflict.
However, the supply chain has been severely interrupted since the Russia-Ukraine crisis. Pakistan is experiencing severe grain scarcity, which is driving up prices dramatically, along with agricultural loss from flooding.
Pakistan Rupee 229 vs. Dollar
Another horrifying sign of the nation’s pressure is how the Pakistani Rupee compares to the US Dollar.
The currency rate is collapsing at PKR 229 to the dollar in the interbank foreign exchange market due to rising import payments, declining inflows under exports, and remittances.
The rupee was also devalued due to declining export and remittance inflows.
$3.66 billion Current Account Deficit
In the first half (July – December) of the fiscal year 2022-2023, Pakistan’s current account deficit fell by 60% to $3.66 billion. In the second half of the previous fiscal year, there was a $9.09 billion current account deficit.
According to the Pakistan Bureau of Statistics, the import bill decreased by 23% to $31.38 billion during the first half of the current fiscal year, according to Pakistan Bureau of Statistics has been the main cause of the drastic fall.
Italy-based gas supplier to cut supplies
After the Italian-based LNG trading business, ENI, said that it wouldn’t be able to deliver its next shipment, the country’s fuel situation is predicted to only become worse.
According to The News, which Geo News cited, “The gas deficit would rise as imported LNG decreases to 700 mmcfd as only five cargoes—for 13.37% of Brent—and two cargoes—under GtG agreements with Qatar—for 10.2% of Brent—would be available in February. There won’t be any LNG shipment from ENI in February for 12.14 percent. And this will make the nation’s gas issue worse.
Delay in IMF loan payments
Even after failing to comply with the requirements that gasoline and diesel prices be raised even more, the administration could not get a loan from the International Monetary Fund (IMF).
IMF is delaying the approval of its 24th loan while waiting for clarification from the administration, further complicating the situation in the nation.
Arab World extends a helping hand.
According to Geo News, the Abu Dhabi Fund for Development (ADFD) has given a $1 billion additional loan in addition to rolling over the current $2 billion credit.
The SBP’s current foreign currency reserves are $4.5 billion, the same as three weeks’ worth of import bills held by the central bank.
Advice from Pak’s richest businessman
The wealthiest businessman in Pakistan, Miya Masha, also known as Ambani, has urged the nation to change its obstinate stance and resume trade talks with India by opening its borders.
He urged the government to quickly reach an agreement with the IMF to prevent the looming crisis and do all in its power to attract foreign investors.
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