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Pakistan Going Sri Lanka’s Way

Like Sri Lanka, Pakistan, too, is struggling to keep its economy going. Now, one litre of milk costs PKR 250 in the South Asian nation. The price of chicken, which used to be consumed daily by the people of Pakistan at one time, is beyond affordability; as 1kg of chicken costs PKR 780. Islamabad has a mere USD 4.343 billion in its foreign currency reserves, and USD 3 billion of that amount belongs to Saudi Arabia. Experts have opined that the spiraling economic crisis and shortage of foreign currency reserves have led to an acute shortage of food, medicines and other essential commodities in Pakistan. Just like Sri Lanka, large parts of Pakistan have been suffering because of chronic shortage of electricity, resulting in huge losses to industries and subsequent loss of jobs for millions of people. In such a situation, Khawaja Muhammad Asif, the Defence Minister of Pakistan, recently confessed that his country has already gone bankrupt. He has also urged his countrymen to stand on their feet.

Speaking at a convocation event in Sialkot in mid-February 2023, the leader of the Pakistan Muslim League-Nawaz (PML-N) Party stressed: “People must have heard that Pakistan has defaulted and there exists an (economic) meltdown, which stands correct.” Asif further admitted that the Government failed to control the prices of water, flour and other essential food items. Hence, the common people are facing the heat. He told the audience: “Pakistan has not been defaulting, but has already defaulted. We are residents of a bankrupt country. People have been saying that Pakistan has defaulted and there exists an (economic) meltdown, but all that has already happened and we need to stand on our feet.

Meanwhile, the Defence Minister blamed the previous Government of Pakistan, led by Imran Ahmed Khan Niazi, for this crisis. He alleged that the Imran Khan Government had imported terrorism into the country, and it became the destiny of Pakistan. At the same time, he expressed hope that Islamabad could change this situation for the betterment. “We are looking towards the International Monetary Fund (IMF) for help,” insisted Asif.

Soon after the video of Khwaja Asif’s speech on bankruptcy went viral, members of the Oppositions, including Imran Khan’s Pakistan Tehreek-e-Insaf (PTI) Party, condemned the incumbent PML-N’s regime, stressing that Prime Minister Mian Muhammad Shehbaz Sharif took just 10 months to bring the country to a sorry state.

It may be noted that Pakistan had taken a USD 6 billion IMF bailout in 2019. The global lender sanctioned another USD 1.1 billion in 2022 to help Islamabad, following the unprecedented floods. However, the IMF suspended disbursements in November 2022 because of Pakistan’s failure to make a steady progress on fiscal consolidation amid political turmoil in the country.

Experts believe that the ongoing economic crisis in Pakistan is similar to the levels faced by Sri Lanka. The island nation had gone through a similar situation prior to its default, and Pakistan is now at the same juncture. Experts are of the opinion that China has played a major role in triggering an economic crisis in the two South Asian countries. Both Pakistan and Sri Lanka have become heavily dependent on China, as far as various developmental projects are concerned. Beijing took this opportunity, prompting Islamabad and Colombo to fall into its debt-trap. In the past, the Asian Giant had done the same with several African nations.

Pakistani Economist Khurram Hussain has said that Islamabad has no other option, but to accept the stringent terms and conditions laid down by the IMF, in order to recover from the current economic crisis. According to Hussain, such a move would be costly for the political and military establishments in Pakistan, as they would have to pay a huge political price domestically because of subsequent economic hardships faced by the people. The economist believes that although Prime Minister Sharif held several meetings with former Finance Minister Miftah Ismail to discuss the economic challenges before coming into power, the PM has so far failed to lead the country in a proper manner. Now, the Shehbaz Sharif Administration will have to increase prices of essential commodities to exorbitant levels as per the IMF’s instructions. Furthermore, it shall not be possible for Pakistan to lower its dependency on China in near future.

Foreign Policy experts have advised Pakistan to concentrate on its economy, instead of trying to destabilise India by encouraging terrorist outfits to launch terror attacks in the neighbouring country.

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