Political turmoil wrecks Pak economy 

Advertisement

The political unrest has also led to freezing of petroleum product rates and increasing the subsidies in different forms…reports Asian Lite News

Pakistans political turmoil is having a major impact on the countrys economy, which is already in a feeble condition. The unrest has wreaked havoc in all economic fronts, further plunging the country’s financial status.

According to statistics, the country’s total debt and liabilities stand at 52,724.5 million PKR during the second quarter of the year 2022, showing an increase of at least 15.5 per cent from the previous quarter. Moreover, the government’s domestic debts are 26,746.9 million PKR, while public sector enterprises debt stood at 1,503.8 million PKR.

External debt is at 21,004 million PKR, of which the government debt was 14,810 million PKR, non-government external debt was 4,222.9 million PKR, country’s debt to the IMF stood at 11,885.4 million PKR, and the intercompany external debt from direct investors abroad was Rs782.27 million.

With the current financial situation of the country, generation of revenue to finance the expenses is not enough as it is not in line with the increase in expenses. Pakistan’s $30 billion yearly remittances are totally consumed to finance imports, having direct impact on the current account deficit, which continues to surge.

The political unrest has also led to freezing of petroleum product rates and increasing the subsidies in different forms.

Due to the depreciation of the Pakistani rupee against the US dollar, the country is rapidly increasing its debt servicing, even when it is not taking any loans. The depreciation of rupee against the dollar has already increased Pakistan’s debt liability to local currency by 130 billion PKR.

In the last month alone, Pakistan has added at least 980 billion PKR to its debt profile as the country keeps looking for bailout worth similar amounts through different sources as a loan to run the government.

The Rawalpindi Chamber of Commerce and Industry (RCCI) has expressed deep concern over the current economic and political uncertainty in the country.

“Pakistan’s trade relations with the United States and Europe should be viewed beyond politics. The US and Europe are important economic partners of Pakistan and both are major export markets for Pakistan”, stated President Nadeem Rauf and group leader and former President RCCI Sohail Altaf.

Pakistan’s business community has urged that political parties to show prudence and wisdom to resolve the crisis.

ADB forecasts gloomy picture

The Asian Development Bank (ADB) on Wednesday forecast Pakistan’s economic growth rate to slow down to 4 per cent this year from 5.6 pc in the Fiscal Year 2021.

The decline in the growth rate is owing to tighter fiscal and monetary policies and the Russia-Ukraine war. According to the Asian Development Outlook (ADO) 2022, ADB’s annual flagship publication, the Manila-based lending agency said Pakistan’s revenue collection was still lower when compared with peers and needed a strong reform effort to achieve its tax-to-GDP potential of 22-25pc, reported Dawn.

Moreover, the ADB also projected growth in South Asia to slow to 7pc in 2022 (from 8.3pc in 2021), before picking up to 7.4pc in 2023.

“Pakistan’s growth is forecast moderating to 4pc in 2022 on weaker domestic demand from monetary tightening and fiscal consolidation before picking up to 4.5 in 2023”, the ADB said.

The ADB expected inflation to pick up in FY22, averaging 11pc, reflecting higher international energy prices, significant currency depreciation, and elevated global food prices from supply disruptions reported the newspaper.

Pakistan is a net importer of oil and natural gas, with both comprising almost 20pc of total imports, the country will continue experiencing strong inflationary pressure for the rest of the current fiscal year from the jump in global fuel prices related to the Russian invasion of Ukraine.

ALSO READ-Imran plans street protests