The social situation in Pakistan is going to worsen due to severe economic crisis and floods that devastated the country last year. It would be a wonder if the new year did not offer any hope for the country, and it did not lead to resentment and riots among the people. The severe shortage and rising prices of foodstuffs and fuel, including wheat products, in many parts of the country, and the subsequent dispersal of people, indicate otherwise. There are those who worry that a situation similar to what Sri Lanka went through last year is shaping up.
In the meantime, many people may have noticed that many media did not give news importance to the international conference held for Pakistan in Geneva. The conference concluded with a call for help and support from the international community to revive Pakistan’s economy, which was devastated by floods due to climate change. A large number of leaders, including the UN Secretary General, attended the meeting and offered help to Pakistan. The flood devastated Pakistan in 2022 when the economy was moving from crisis to crisis. According to experts in Pakistan, the loss of the flood, which took the lives of about 1700 people and left 80 million people without their homes, is three billion dollars. It had a four-fold impact on the entire economy.
In 2019, Pakistan entered into an agreement with the IMF. Aid of up to seven billion dollars was part of this. The IMF had suggested that in order to bring back the economy, which was struggling with inflation, price rise and foreign debt, wrong economic policies must be corrected and drastic reforms should be implemented in critical sectors. But the flood dashed all hopes. Pakistan, which disobeyed the orders of the IMF, was subsequently refused aid. Flood-ridden Pakistan could not implement proposals such as raising fuel prices and increasing taxes. Does the crisis-hunting IMF have the guts to take it all in? If that were the case, how many starving countries in the world would have recovered.
Pakistan’s foreign reserves have fallen below $6 billion in the past few weeks. It fell to $5.5 billion in December. The dire situation in Sri Lanka came about in such a situation. Pakistan now has enough cash in reserves to cover three weeks worth of imports. Things indicate that repayment of foreign debt, import of essential medicines and food items etc. are going to collapse.
Pakistan is going through the worst economic crisis in the last 30 years. The foreign debt that the country has to pay in the next three months is more than eight billion dollars. It was in this context that Pakistan decided to rely on foreign countries and international institutions. First, the rulers turned to the regions, including the West Asian countries that are closest to them. Pakistan has requested $3 billion in aid from Saudi Arabia.
The international conference held in Geneva on January 9 was organized in collaboration with the UN Secretary General. Prime Minister Shahbaz Sharif even took the IMF representatives into confidence in this regard. In short, the Pakistani media reported that they have received an aid offer of nine billion dollars from more than forty countries. Saudi Arabia pledged $1 billion, the United States $100 million, France $345 million, China $100 million, Japan $77 million, Germany $88 million, the European Union $93 million, and the World Bank $2 billion. Also, the International Islamic Bank, Asian Development Bank, Asian Infrastructure Investment Bank etc. offered help.
At the conference, the UN Secretary General said that Pakistan is a victim of climate catastrophe and a demoralized global financial system. In fact the common citizens of Pakistan are becoming victims as yet another disaster follows them relentlessly. It is the mismanagement, corruption and wrong economic policies of its own rulers. The administration made fools of the people by giving incentives to the country’s super-rich. The country’s inflation reached 25 to 30 percent. Prices of essential food items have gone up by 55 to 60 percent. Prices of onion, wheat etc. have also increased abnormally. Unemployment has worsened in both urban and rural areas. Pandemic and war in Ukraine on the one hand set back the economy while on the other hand the anti-people policies pursued by the different rulers over the years put Pakistan in a serious crisis.
If Imran Khan’s ‘Nayapakistan’ was a big failure, his successor Shahbaz Sharif is facing more challenges. On the one hand, the terrorist threats posed by the Pakistani Taliban have led to severe chaos in the country (they have launched more than 100 attacks in 2022 alone). On the other side, flood and financial crisis. The world is looking forward to see if Pakistan will go through the experiences of Sri Lanka.
(The author is Senior Fellow, Indian Council for Social Science Research and Director, Inter University Center for Social Science Research, M.G. University)