From political turmoil to cash-strapped foreign exchange, PM Shehbaz Sharif's government faces an acute economic crisis.
By: Sourit Sanyal: In the middle of a political turmoil, Pakistan is reeled for yet another economic crisis. Long hours of power outages is taking a toll on the business and daily livelihood. Amid the heatwave that is sweeping across several parts of South Asia, including India and Pakistan, the people there are facing power cuts up to 8-12 hours a day. The Chinese power producers, who come under the China-Pakistan Economic Corridor (CPEC), have now started shutting down various power plants as Shehbaz Sharif's cash-strapped government faces outstanding dues worth 300 billion rupees (US$1.5 billion), affecting the already ailing economy.
Fuel sources of the country are running out increasingly, forcing the government to bring various precautionary measures like wedding ceremonies to be ended by 10 PM, restriction on the usage of air conditioners and work from home being made compulsory in many offices. This fuel crisis has also led to a food crisis, where prices have surged up to 17.3% as people are plunged into darkness and hunger, even in cities like Islamabad and Rawalpindi. The inflation of Pakistan has now reached 13.8 per cent and former prime minister Imran Khan has warned of a worsening situation in the coming days.
According to economists at Citigroup Inc., Pakistan's budget is not sufficient enough to qualify for a loan from the International Monetary Fund (IMF). This warning comes before IMF workers are about to visit Pakistani officials, who seek an immediate loan of $900 million. The country's foreign-exchange reserves are below $10 billion, and it needs at least $41 billion in the coming 12 months. Petrol prices have also skyrocketed by Rs 24 per litre, reaching a record high of Rs 233.89. Imran Khan has pointed out how the fuel price hike would severely affect the lower and middle-class people.
Stranded in a critical situation, PM Sharif is frantically hoping to get out of this situation as he aims to hold a "grand dialogue" with the stakeholders for fixing the economic crisis of the cash-starved country. But political turmoil continues alongside the economic crisis as ousted premier Imran Khan also rejected Sharif's offer for a "grand dialogue".
Pm Sharif on Thursday, after facing backlash over fuel price hike, said he was left with no choice. While accepting the fact that fuel price hike would further increase the inflation, Sharif accused the previous Imran Khan-led government of leaving the economy in a mess.
However, unimpressed by government's reassurances, Imran Khan's PTI has called for a nation-wide protests against price hike and power outages on Sunday.
Both the Pakistan Muslim League-Nawaz (PML-N) and the Pakistan Tehreek-e-Insaf (PTI) exchanged barbs over Pakistan's economic mess ever since the formal presentation of the budget in the National Assembly. Amidst this ongoing economic crisis, Pakistan goes through, the people have been asked to reduce their consumption of drinking tea to keep the country's economy afloat. Ahsan Iqbal, the former Minister for Interior of Pakistan said that fewer cups of tea would help the country in cutting down on its high import bills. He stated, "I appeal to the nation to cut down the consumption of tea by one to two cups because we import tea on loan". Pakistan stands as the largest global importer of tea, buying more than $600 million worth of tea last year. This request was quick to go viral across social media.
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