Pakistan is facing a severe financial crisis, with its debt reaching an all-time high and its economy struggling to stay afloat. The hashtag #PakistanBankrupt has been trending on social media, as citizens express their concerns and frustration over the state of the nation’s finances.
The root of the problem can be traced back to a lack of financial discipline and ineffective monetary policies. The country has been borrowing heavily from international financial institutions, leading to a steep increase in its national debt. According to reports, Pakistan’s debt has risen to over $100 billion, with interest payments alone consuming a large portion of its budget.
Another factor contributing to the financial crisis is the country’s dwindling foreign reserves. Pakistan is heavily dependent on imports, and with its reserves depleted, it is struggling to pay for essential goods and services. This has resulted in widespread shortages and increased inflation, putting further strain on an already struggling economy.
The government’s response to the crisis has been criticized by many, with some alleging that they are not doing enough to address the root causes of the financial crisis. In addition, there are concerns over corruption and mismanagement, with allegations that public funds are being siphoned off to line the pockets of the wealthy and powerful. Cash starved Pakistan still spends big amount on military despite financial meltdown. In 2022, their defence expenditure was budgeted at Rs 1,523 billion, which makes up 17.5 per cent of the total current expenditure.
India also critizes Pakistan on the infiltration in Kashmir and their military sponsored terrorism. The current literacy rate in Pakistan is 62.3 per cent which means that around 90 million people in the country cannot read and write. Literacy is an essential part of being able to understand the context of political issues and to make informed decisions about who to vote for. Without the ability to read and write, it is unlikely that 90 million people in Pakistan would be able to make a wise decision about who to vote for in an election.
Social media has been abuzz with discussions on the topic, with many Pakistanis expressing their frustration and disappointment over the state of the nation’s finances. Many have pointed out that the government needs to take swift and decisive action to address the crisis, and to put in place measures to prevent it from happening again in the future.
One Twitter user stated, “Pakistan has been in a financial mess for far too long. It’s time for the government to step up and take decisive action to fix this mess.” Another user pointed out, “The government’s inability to address the financial crisis is affecting the lives of ordinary citizens. It’s time for them to take this seriously.”
Former Prime Minister of Pakistan IMran Khan and current chairman of the Pakistan Tehreek-e-Insaf party, has stated that Prime Minister Shehbaz Sharif is traveling the world with a “begging bowl” but has not received any help from other countries. In a recent interview with a local news channel, Khan criticized the current government and said, “See what this imported government has done to Pakistan.”
Despite the challenges, there are also those who are hopeful that the country will be able to turn things around. They believe that with the right policies and leadership, Pakistan can pull itself out of this financial crisis and build a strong and prosperous economy.
Pakistan is heaviliy relying on International Monetary Fund (IMF) to come out of the current turmoil. The International Monetary Fund (IMF) and Pakistan have concluded the first round of technical talks and are expected to share nine tables comprising the country’s macroeconomic and fiscal framework. If both parties reach a consensus on fixing the economy by February 9, they will sign a staff-level agreement.
The talks started on January 31 have been called “tough” by Prime Minister Imran Khan. The authorities have revised the GDP growth projections from 5% to 1.5-2% and inflation from 12.5% to 29% in the current fiscal year. The IMF team has noted that the nominal growth is projected to exceed 30%. The Federal Board of Revenue of Pakistan’s (FBR) tax-to-GDP ratio is expected to decline, even if it meets its tax collection target of Rs7,470 billion. The IMF is proposing harsh measures, such as increasing the tax collection target and imposing additional taxes, to fill the fiscal gap.
The decline of the economy reflects the political turmoil in the country, with former Prime Minister Imran Khan pushing for early elections and putting pressure on the ruling coalition despite his high popularity. In 2019, Khan secured a multi-billion dollar loan package from the IMF but failed to follow through on his commitments to reduce subsidies and market interventions, leading to a stall in the program. This is a recurring pattern in Pakistan where a large population lives in rural poverty, and over the years, many IMF agreements have been made and then broken.
The financial crisis in Pakistan is a complex and challenging issue, but it is also an opportunity for the country to take a hard look at its policies and make the necessary changes to secure its future. Pakistan can come out of the financial crisis if the political leadership focuses on economic reforms. Tax collection and reducing government spending may provide an immediate relief. Encouraging foreign investments and promoting exports will also help the country in boosting the economy.
However, Controlling corruption must be the top priority of the government. The government must take swift and decisive action to address the root causes of the crisis, and to implement reforms that will put the country on a path to sustained growth and prosperity.
