Pakistan’s situation is worsening rapidly, and the economy is on the verge of collapse. The country’s foreign exchange reserves are depleting, and imports are getting expensive as food, fuel, medicines, and electricity prices keep rising.
We are in the grip of a deep economic crisis that is also affecting the polity and social cohesion. The country is polarised, and the security situation has gone topsy-turvy because of the Taliban.
It is a time of crisis as the rupee depreciates against the dollar, and inflation rates are skyrocketing. This situation can only be fixed by massive surgery – structural reforms which require an end to elite capture, a downsizing of the Army and other state agencies, a reduction in subsidies to industry, and cutting open and hidden public sector white elephants.
Pakistan needs at least $10 billion to stave off a debt default, which can only be achieved through a bailout deal with the International Monetary Fund (IMF). The country talks about loans with China, Saudi Arabia, and the UAE.
However, the IMF is deadlocked and has yet to agree to provide money, even after the finance minister outlined a detailed recovery plan roadmap. Instead, the fund demands harsh conditions and will only agree to lend if the country commits to various reforms, including dropping energy subsidies, introducing a national currency, and closing government white elephants.
What is most worrying is that the IMF, which has been lending to Pakistan for the last seven years, could be forced to default on its sovereign debt in a matter of weeks if it does not get its program back on track before the fund’s negotiators leave Islamabad later this week.
This scenario will bring chaos and instability to the nation as citizens of Pakistan have to struggle daily to make ends meet and feed their families. This will only worsen as imports of essential commodities like wheat, onions, pulses, and tires become increasingly costly due to the depreciation of the rupee against the US dollar.
The price of a kilogram of chicken is now above 780 Pakistani rupees, and other imports are going up by as much as 50 percent. This situation will not only create problems for the country but also put law and order in jeopardy.
This will result in people protesting against the government, and law and order will be severely compromised. The situation is aggravated by Pakistan being in an election year, which will only lead to more instability. This situation will stay the same in the medium term, and if it does, it will be exceedingly messy.
