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Business News/ News / India/  Pakistan economic crisis: Inflation, forex reserves among 5 worrisome indicators

Pakistan economic crisis: Inflation, forex reserves among 5 worrisome indicators

Here are five indicators that highlight Pakistan's worsening economic situation that has threatened the upcoming elections in the country.

Common citizens are suffering from high prices of food, power, medicines and other essential items. (Reuters)Premium
Common citizens are suffering from high prices of food, power, medicines and other essential items. (Reuters)

Pakistan has been struggling with an economic downfall for the last few months with multiple indicators clearly suggesting that the country is battling its worst nightmare since 1971 when the country lost a war against India and partitioned from Bangladesh. 

Amid the growing concerns of economic turmoil, the prices of essential items are surging like milk costs 250 per litre, and chicken prices have shot up to 780 per kilogram in the country, while defense minister Khawaja Asif declared that the country has already gone “bankrupt".

Let's know Pakistan's economic situation with these economic indicators, 

1) External debts jump by 70%

Pakistan's external debt servicing rose by 70% in the first two quarters of 2022-23, worsening the shortage of dollars, Dawn reported. The amount of debt servicing in the second quarter of 2022-23 was almost twice the sum (USD 3.45 billion) that the country paid in the preceding quarter of the same fiscal year.

Such a high level of debt servicing in the first half of 2022-23 drastically reduced the foreign exchange reserves of the SBP, which is responsible for such payments. Foreign exchange reserves of the SBP are hovering around USD 3.2 billion, according to Dawn.

2) Forex reserves dropped to $3 billion

Pakistan's foreign exchange reserves held by the central bank rose by US$276 million to $3.193 billion for the week of February 10, the State Bank of Pakistan said on Thursday. The country's total liquid foreign exchange reserves stood at $8.702 billion, the bank said in a statement.

3) Fiscal deficit 43%

For the July-September quarter of 2023, Pakistan's fiscal deficit widened by 43, according to a report on Pakistan Revenue, quoting official data released by the ministry of finance. It further elaborated that the budget deficit of the country was 1 percent of the GDP during the first quarter of the current fiscal year as compared with the deficit of 0.7 percent in the corresponding quarter of the preceding fiscal year.

4) Weekly inflation surges to 38%

Crisis-hit Pakistan recorded a new high in inflation as it went to 38.42 percent in the outgoing week, both on an on-year and on-week bases, reported Dawn citing official data. 

The price rose significantly mainly driven by onions, chicken, cooking oil, and a massive jump in fuel costs. The price of petrol has been moved up to 272 per litre after an increase of 22.20. 

5) IMF loan delay

Pakistan is in panic after the IMF team that came to negotiate the details left without reaching a final agreement last week. Even though Finance Minister Ishaq Dar and Prime Minister Shehbaz Sharif agreed to all the preconditions. Now, Pakistan has also increase the taxes and fuel prices.

The IMF, Saudi Arabia and the United Arab Emirates have been interfering in Pakistan's polity. They have been calling for structural reforms in the economy when the people are suffering at the delay in the release of the IMF's tranche, as per the news report.

6) Pakistan Rupee vs Dollar

Pakistan Rupee value against Dollar is another gruesome indicator of the strain country is facing. On the back of mounting import payments, falling inflows under exports and remittances the exchange rate is howering at PKR 262.85 to the dollar in the interbank foreign exchange market. Besides, falling inflows under exports and remittances also resulted in devaluation of the rupee.

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Published: 19 Feb 2023, 10:59 AM IST
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