The Collapsing Of Pakistan’s Economy
The IMF’s July report on Pakistan said : “Pakistan’s economy is at a critical juncture. The legacy of misaligned economic policies, including large fiscal deficits, loose monetary policy, and defence of an overvalued exchange rate, fueled consumption and short-term growth in recent years, but steadily eroded macroeconomic buffers, increased external and public debt, and depleted international reserves”.
The report also highlighted some fundamental deficiencies that have never been looked into — these included a “chronically weak tax administration, a difficult business environment, inefficient and loss making SOEs (state-owned enterprises), amid a large informal economy”.
The IMF warned that “without urgent policy action, economic and financial stability could be at risk, and growth prospects will be insufficient to meet the needs of a rapidly growing population”.
Though many Pakistani themselves say that the main reason for Pakistan’s broken economy is its dysfunctional political system which still runs on rent-seeking and patronage, and is largely devoid of transparency and dispersed institutional autonomy.
Pakistan has set a sort of record of borrowing money to sustain itself. As of March 2019, the country’s outstanding debt was more than $85 billion (approximately 6 lakh crore in Indian rupees). It has taken loans from a very large number of countries in Western Europe and the Middle East. Its largest creditor is China.
Apart from individual countries, Pakistan has also taken substantial loans from a whole host of international institutions. In May this year, Pakistan reached out to the IMF for the 23rd time in its existence, seeking a $6 billion bailout. The Pakistan government’s revenues must go up by a whopping 40% in this financial year to meet the IMF’s loan.
However instead of concentrating on improving its economy, ever since Parliament of India revoked the special status enjoyed by State of Jammu and Kashmir, Pakistan’s Prime Minister Imran Khan and his colleagues have turned stark mad. Meddling in the internal affairs of India these BEGGARS have been warning India and the rest of the World of a potential military conflict, even nuclear war.
On Thursday evening, the Ministry of External Affairs condemned the “highly irresponsible statements made by the Pakistani leadership on matters internal to India… (including) references to jihad and to incite violence in India”.
Next as a demonstration to its uneducated mass, Pakistan had tested its obsolete surface-to-surface ballistic missile Ghaznavi, which is capable of delivering multiple types of warheads just up to 290 km.
On Tuesday, Pakistan’s Science and Technology Minister Fawad Chaudhary, a close aide of Imran’s, had posted on Twitter that his Prime Minister was “considering a complete closure of airspace to India, a complete ban on use of Pakistan land routes for Indian trade to Afghanistan”, and boasted that “Modi has started, we’ll finish!”.
If Pakistan does close down its airspace to India completely, flights to/from airports in the Gulf, Europe and the United States from/to India could get longer by perhaps 70-80 minutes. When Pakistan took this step from February 26 to July 16 in the wake of the Balakot airstrikes, Indian carriers lost around Rs 700 crore. However, Pakistan itself suffered more — losing around Rs 350 crores in revenues. They forget that Indian economy is 11 times bigger than Pakistan.
This bluster of Pakistan and threats of hurting India financially come at a time when its own economy is in a perilous state, teetering on the brink of collapse, with no room for losing any revenue.
