Pakistan Economy – Pakistan is currently facing an economic & political crisis and is on the verge of bankruptcy as well as political instability. The country’s high borrowing has led to a total debt and liability of Pakistani Rupees 59,697.7 billion in FY ’22, which is approximately 89% of the country’s total GDP. Unemployment and poverty are proving huge hindrances to food, healthcare, and wages for the citizens of the country. Pakistan is essentially running on foreign loans, an economic model that only leads to borrowing more, which eventually results in bankruptcy. Between February 2023 and June 2026, Pakistan will have to repay around $80 billion in foreign debt. Plunging forex reserves have left Pakistan with only import cover for over a month. These are just some of the factors contributing to Pakistan’s current economic situation.
Radicalism, and militarization is at peak in Pakistan.
In Pakistan, electricity supplies to households and industries have been cut.
The cash-strapped country can no longer afford to buy natural gas or coal from overseas to fuel its power plants, and run the country.
- There is a medicine shortage in Pakistan, it does not have even basic medicines like Disprin etc.
- If we speak of inflation it stands at 38 percent, Pakistan has never seen or imagined such inflation rate since its existence (1947). Even a recent already bankrupted country like Sri Lanka (before bankruptcy) had lower inflation than Pakistan
- If we speak of food prices, they are touching the sky, milk is selling at 235 PKR per liter, Chicken costs 700 to 780 PKR, boneless meat is selling at 1000.
- Same story with fuel prices, petrol is selling at 272 Pakistani Rupees per liter diesel is selling at 262 Pakistani Rupees per liter kerosene at 217 per PKR
- The currency of Pakistan is falling drastically that it can mark 300 PKR against a USD.
- Pakistan only have Forex Reserves of 7 billion dollars left as of Feb 2023.
Pakistan’s Debt Crisis: Pakistan Economy
Pakistan has never been a stable economy since 1980, and economic instability is a part of Pakistan’s history since its existence, however today’s economic situation is different as it is nearing collapse this is primarily because of the country’s debt.
Pakistan’s debt has been growing exponentially since 2000. Pakistan’s debt was $36.7Bn in the year 2000, but the number had grown to $127.8 billion by 2022. This represents an increase of 237% over the past 22 years…
The economy of Pakistan is seriously concerned about its debt load. It is challenging for the government to finance spending and engage in development initiatives when debt levels are high. Additionally, it makes a nation more susceptible to outside shocks like fluctuations in interest rates or commodity prices.
Pakistan’s Debt Crisis: No Financial Aid Can Help
list of countries that have provided financial aid to Pakistan since 2000, along with the total amount of aid received from each country:
| Country | Total Aid Received (USD) |
|---|---|
| United States | 37.6 billion |
| China | 24.5 billion |
| Saudi Arabia | 12.1 billion |
| United Kingdom | 4.7 billion |
| Japan | 4.2 billion |
| European Union | 3.7 billion |
| World Bank | 3.5 billion |
| Asian Development Bank | 3.2 billion |
| Qatar | 2.9 billion |
| United Arab Emirates | 2.6 billion |
Pakistan has received over 100 billion USD in total as financial aid from other countries since 2000; the majority of this aid has been provided by the United States, China, and Saudi Arabia.
The majority of this aid has been used to finance military and security operations, as well as development projects. However, there have been allegations that some of this aid has been used for corrupt purposes, such as lining the pockets of government officials and military officers.
In 2017, the Asia Society Policy Institute released a report that found that Pakistan’s military and some corrupt ministers had used foreign aid to benefit themselves but not the public. The report found that the military had used aid money to purchase luxury goods and build lavish compounds, while corrupt ministers had used aid money to fund their own businesses and personal expenses.
The report also found that the lack of transparency and accountability in Pakistan’s aid program had made it difficult to track where the money was going and to ensure that it was being used for its intended purposes.
The allegations of corruption in Pakistan’s aid program have raised serious concerns about the effectiveness of this aid. If the money is not being used to benefit the public, then it is not fulfilling its purpose. This is a serious problem that needs to be addressed if Pakistan is to achieve its development goals.
According to IMF, Pakistan’s GDP is $376 billion in 2023. Interestingly, Pakistan spends heavily on its military In 2022, the government of Pakistan allocated 1.453 trillion Pakistani rupees ($7.6 billion) to the military, accounting for 17.5% of the total government budget this makes the Pakistani military one of the largest in the world relative to its size that.
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Inflation in Pakistan
Pakistan has never been a politically nor economically stable country since its existence.
Pakistan’s inflation rate has been rising in recent months. In April 2023, the inflation rate was 36.4%, which is the highest it has been in over 40 years.
Currently, Pakistan is facing the worst inflation in its history, it is being recorded that the inflation rate in Pakistan is 38% as of 8 June 2023.
There are a number of factors that are contributing to Pakistan’s rising inflation rate, including:
The Russia-Ukraine War: The Russia-Ukraine war has caused a sharp increase in the prices of oil and other commodities. This has led to higher input costs for businesses, which have passed on these costs to consumers in the form of higher prices.
The Devaluation of the Pakistani Rupee: The Pakistani rupee has lost about 30% of its value against the US dollar in the past year, as of April 2027, 285 PKR = 1 Dollar. This has made imported goods more expensive, which has also contributed to inflation.
The Government’s Fiscal Deficit: The Pakistani government has a large fiscal deficit, which means that it is spending more money than it is taking in. This has led to the government printing more money, which has also contributed to inflation.
The trade ban with India: The trade ban with India has made it difficult for Pakistan to import goods from India, which has led to higher prices for some goods in Pakistan.The 2019 Trade Ban with India: The trade ban with India has made it difficult for Pakistan to import goods from India, which has led to higher prices for some goods in Pakistan. India is Pakistan’s largest trading partner, and the ban has had a significant impact on the Pakistani economy. The ban has made it difficult for Pakistan to import goods such as food (Wheat, rice, dal), medicine, and machinery, which has led to higher prices for these goods in Pakistan.
Pakistan’s economy was significantly impacted by the trade restrictions. Exports from Pakistan to India decreased by 60% during the first two years of the prohibition, while imports from India increased by 80%. Pakistan has lost trade worth billions as a result.
Pakistani manufacturing was also negatively impacted by the trade blockade. Many Pakistani factories that relied on raw materials from India were compelled to close down or scale back their output. Jobs have been lost as a result, and economic activity has decreased.
The trade ban also made it more challenging for Pakistan to get hold of necessities like food and medication. As a result, these goods became more scarce and more expensive.
Pakistani businesspeople and economists have denounced the restriction. They contend that Pakistan’s economy is being harmed by the prohibition.
Poor Economic Policies: The Pakistani government has implemented a number of economic policies that have contributed to inflation, such as subsidizing fuel and electricity, which has led to higher government spending and higher prices for consumers.Corrupt Leaders and Military Chief: The corrupt leaders and military chief of Pakistan are also responsible for the country’s inflation. The corrupt leaders have embezzled billions of dollars from the government, which has led to a shortage of funds for essential services such as education and healthcare. This has made it difficult for the government to provide basic necessities to the people, which has led to inflation. The military chief has also been accused of corruption, and his lavish lifestyle has further drained the country’s resources.
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How the Pakistani Military Ruined the Economy and Future of Pakistan
The Pakistani military has a long history of involvement in the country’s economy and politics. It has been accused of using its power to enrich itself and its allies, and to stifle dissent.
It is not known how much Pakistan Army actually earns from the trade. However, it is estimated that the military’s business generate billions of dollars a year. The Army’s business interests are vast, and it is known that they are involved in everything from real estate to construction to banking. The Pakistani army also has a monopoly over arms and ammunition manufacturing in Pakistan.
Some have criticized the military’s business interests in giving them too much power and influence in the Pakistani economy. Pakistani Military also controls over their key industries, which sometimes becomes an obstacle to economic growth.
Despite the criticism, the Pakistani military has shown no signs of abandoning its commercial interests. Soldiers see their professional interests as a way to generate revenue to support their operations and create jobs for their retired personnel.
The fact that the military in Pakistan controls numerous companies and assets demonstrates its influence over the country’s economy as well as its foreign policy.
These include the Fauji Foundation, which is a conglomerate with interests in everything from agriculture to manufacturing to real estate.
The military also controls the National Logistics Cell, which is a major transportation company.
The political influence of the military is also significant. It has been accused of rigging elections and using their power to intimidate and silence critics. The military is also accused of using its influence to promote its own interests, even when it is not in the best interests of the country.
Their military power over Pakistan is reflected in the fact that they have ruled for more than half of the country’s history. It has also been accused of using its power to suppress opposition and promote its own agenda.
That’s why many visionary establishments & leaders unofficially consider Pakistan as Military Dictatorship.
Sources:
- https://en.wikipedia.org/wiki/Pakistan_Army
- https://www.dawn.com/news/1272211
- https://asia.nikkei.com/Economy/Inflation/Pakistan-inflation-hits-record-35-as-IMF-talks-drag-on
- https://www.aninews.in/news/world/asia/pakistans-civilian-military-judicial-establishment-suffers-from-lack-of-vision-report20230208222525/
- https://www.imf.org/en/Countries/PAK
- https://www.imf.org/external/datamapper/profile/PAK
- https://www.cgdev.org/page/aid-pakistan-numbers
- https://en.wikipedia.org/wiki/Foreign_aid_to_Pakistan
- https://asiasociety.org/education/pakistan-political-history
- https://www.worldbank.org/en/country/pakistan/overview