Overview of Current economic condition of Pakistan:

Pakistan faces today the multi-layered problems in the economic, political, cultural and social
realm. The PTI government’s inconsistent economic policies, along with the global pandemic
and the war in Ukraine, have brought Pakistan’s economy to a grinding halt. Here is the
overview of Pakistan current economic situation.
In a recent report, the World Bank noted that Pakistan has joined the list of top ten nations with
the largest foreign debts with debt of about Rs 42.76 trillion. On Pakistan's request, $4.4 billion
was rescheduled ($2.4 billion by China and $2 billion by the UAE). The inability of a country to
pay its debts on schedule is shown by loan rescheduling. When this is combined with the rising
trade deficit, which reached more than $30 billion in the first nine months of the current fiscal
year, it's not a good sign on the external front. Moreover, as uncertainty gripped Pakistan over
the last few months, money started flowing out of Pakistan. In March, reports suggest a net
amount of billions of dollars was taken out by investors. 
On the domestic front, the PTI's "relief package" blew a huge hole in the government's already
strained budget. According to OGRA, the subsidy on petroleum goods costs Rs. 63 billion each
day, making it unsustainable. Therefore, they recommended ending subsidy and pricing petrol at
Rs. 213 per liter as uncertainty perpetuates. Hospitals have reportedly stopped treating patients
using Sehat Cards since vendor payments have not been completed for a month or two. The
money was most likely redirected to support a subsidy. National Power Control Centre (NPCC)
has warned of severe fuel shortages in the coming days, which will affect electricity production.
That’s because the fuel suppliers, mostly foreign, are quite wary of Pakistan’s paying capacity as
dollars flow out and we only have two months of reserves left. So, they would hesitate to supply
fuel. The percentage of GDP spent on export has decreased from 19 percent of GDP in 1990 to
8.5 percent. While public investment has decreased, the budget deficit has remained high for the
past 30 years.
As a result, the economy is stuck in a vicious cycle of low investment, poor productivity, low
exports, and high debt and debt payments. It's unclear whether there's a strategy in place to fix it.
Whatever the reason, it demonstrates the governments' incapacity to reform. While the
government should do everything it can to assist the economy grow and industrialize, it is only
concerned with the short term.
Graphical Overview of Economy:
REASONS:
 The first and most obvious reason for Pakistan’s failure is political instability as all
economics ultimately is rooted in politics. Not even a single prime minister in Pakistan
has completed his or her term. The country has been swinging between democratic and
military rule. Even during the democratic rule every single leader who comes up first
tries to rectify the mistakes committed by the previous leader and by the time they start
acting on their policies they are overthrown by another entity. When this kind of political
instability exists there are three major drawbacks at kicking for any country. Firstly, even
if you've got valuable assets like labor and skilled workforce foreign companies will not
set up their units in your country.
 The second and a bigger problem for Pakistan’s crisis is Pakistan’s war brokering
business as in 9/11 war. It did not just tarnish the global image of Pakistan and made
them look like a terrorist nation but also started repelling foreign direct investments and
more importantly it also started eroding into the existing industries a classy example of
the same is the cricketing industry when Sri Lankan cricketers was trapped by masked
terrorists. Similarly the tourism industry of Pakistan collapsed, foreign direct investment
started fading away and many other sectors drastically got affected.
 Third reason is the generous loans offers from China specifically for Gawadar port. Now
just like Sri Lanka since Pakistan did not have the finances to build its own port. China
offered an over generous loan for the Gawadar port and as usual china is doing this not to
help Pakistan but to actually take over the assets using its debt trap strategy. Moreover,
China implies conditions of high interest rate and asked them to pay back in 10 to 15
years. Since the loan and interest is too much for the weak countries to pay back china
takes over the asset and uses it for its own purposes. In this case Pakistan owes china 24.7
billion dollars in debt to china and these loans are said to have an exorbitant interest rate
of 4.1 percent as compared to global standards of just one to two percent and they built
not just quarter port but 26 more projects in Pakistan including solar projects rail projects
highways hydro projects ports and even fiber optic cables running from Pakistan to china
and by the way china has already taken over the golden port from Pakistan on a 40-year
lease.
 More imports of goods and services than exports.
  Lack of investment in Public sectors.
 Lack of attention on agricultural sector

RECOMMENDATIONS:
 Without political stability, administrations will be unable to implement serious reforms.
 Every year, the government must set fiscal and current account deficit objectives and trim
its budget appropriately. Parliament must provide its approval and keep track on the
situation. Even now, this is done through the yearly plan. But no one seems to care.
Parliament must now hold the government accountable.
 Do not just rely on indirect taxes to control the budget deficit. The Government of
Pakistan has restricted the conversation about generating income to indirect taxes such as
a higher fuel charge, GST, and import tariffs. It caters to certain interests. Despite the fact
that every budget speech promises to raise direct taxes, and we may hear it again this
year, the ratio is no better, in fact, it has recently decreased. Indirect taxes contribute
almost twice as much as direct taxes. Large tax exemptions, low rates, and tax evasion
keep the percentage of direct taxes from rising. The average citizen is projected to
continue to contribute to the big budget deficit.
 Pakistan may have to seek debt relief from all lenders, either in the form of a lower
interest rate or a lower principle amount owed. We've attempted debt rescheduling in the
past. Also, because it promotes debt relief when debt becomes unsustainable, the IMF
would have to be persuaded. So far, it thinks our debt is manageable. To persuade the
lenders, we must provide a well-thought-out strategy for economic development and the
abolition of elite privilege. Pakistan has good reason to appeal.
 Increasing exports fast is difficult due to stagnant output of exportable items. The
government may do an item-by-item analysis of which exports may grow swiftly with the
help of incentives. Even a billion dollars in more exports will be beneficial.
 Eliminate all imports of non-essential products. Make an item-by-item evaluation to see
if there are any domestic equivalents for imports or if there are any incentives to get
particular things into production rapidly. The government may explore restricting oil
consumption subsidies.
 Rather than borrowing to repay, allocate remittances for repayment of external debt by
restricting purchases. Of course, money is fungible, but allocation gives the government a
goal to work toward in terms of debt repayment. A ten percent reduction in debt would
result in a $ 3 billion reduction in debt.
 Gradually, we must begin to use external debt solely to fund initiatives that increase GDP
and exports. It is impossible to repay debt that has been eaten rather than invested.
 Restructure the country's debt. The International Monetary Fund (IMF) has issued
guidelines on the matter. The government may make a concerted attempt to divert cash
from debt servicing to development.
 Increase productivity and self-sufficiency. Increase the use of home energy sources. The
administration has been focusing on LNG imports since 2012. A updated petroleum
strategy is required, particularly one that allows for the start of shale gas development.
The new regulation may make it easier for exploration businesses to obtain financing and
technology while also reducing their risk.
 All foreign commercial accords must be subject to legislative examination. If privacy is a
concern, they may be classified and subject to scrutiny by the appropriate parliamentary
committee. Secrecy hasn't worked in the past. Our excessive debt levels and multinational
contracts that result in arbitration judgements against us are two examples. When
something goes wrong, as it usually does, taxpayers and consumers bear the brunt of the
consequences. Decision-makers are never held accountable for their actions.
 To lessen the burden on consumers and taxpayers, and to remove payment uncertainty for
producers, make the power sector financially sustainable. This might help to lower the
budget deficit.
Economic Fallout of Pakistan’s Political Crisis. (n.d.). Thediplomat.com.

https://thediplomat.com/2022/04/economic-fallout-of-pakistans-political-crisis/

Gardezi, A. (2022, April 7). Leading Economist Paints Bleak Picture of Pakistan’s Economy.

https://propakistani.pk/2022/04/07/leading-economist-paints-bleak-picture-of-pakistans-

economy/

Noor, S. (n.d.). The troubled path ahead for Pakistan’s new prime minister. Www.aljazeera.com.

Retrieved June 1, 2022, from https://www.aljazeera.com/opinions/2022/4/16/the-

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