Pakistan has no money to hold elections? 10 worrisome economic indicators
3 min read . Updated: 23 Jan 2023, 01:09 PM IST
Premium10 indicators that highlight Pakistan's worsening economic situation that has threatened the upcoming elections in the country
Pakistan's economy has been on a downward spiral for 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. Common citizens are suffering from a severe shortage of food, power, medicines and other essential items.
Amidst growing concerns of economic turmoil, Pakistan media has quoted Pakistan Democratic Movement (PDM) Spokesperson, Hafiz Hamdullah indicating that if the situation does not improve the upcoming elections will be suspended.
So how bad is the situation there? These economic indicators may throw some light.
Forex Exchange at 9 year-low
Pakistan's foreign exchange reached a record low of $ 4.56 billion, which can cover only three weeks of imports, according to a Geo News report. It is a catastrophic situation for a country that depends heavily on imports. Reports suggest, the decline in funds is due to repayment of USD 1 billion in commercial loans to two UAE-based banks.
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 The budget deficit of the country was 1 per cent of the GDP during the first quarter of the current fiscal year as compared with the deficit of 0.7 per cent in the corresponding quarter of the preceding fiscal year.
Prices have skyrocketed
According to Pakistan media reports prices of essential items have increased drastically with Sensitive Price indicator (SPI) up 32% Year on Year (YoY) for week ending January 19, 2023, according to Pakistan Revenue. Meanwhile, experts are hinting at another 100 basis points hike to bring the benchmark rate to 17 per cent.
Wheat Prices pushing up inflation
Pakistan heavily depends on imports to fulfil its essential food item requirements, primarily from Russia and Ukraine. Before the war broke out Pakistan's wheat imports from the two nations stood at $1.01 billon. However, post Russia-Ukraine conflict the supply chain has been massively disrupted. Clubbed with crop damage due to floods, Pakistan is facing a huge grain shortage, leading to enormous price hike.
Pakistan Rupee 229 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 229 to the dollar in the interbank foreign exchange market. Besides, falling inflows under exports and remittances also resulted in devaluation of the rupee..
Current Account Deficit at $ 3.66bn
Pakistan's current account deficit has plunged by 60% to $3.66 billion in first half (July – December) of fiscal year 2022-2023. The current account deficit was $9.09 billion in the same half of the last fiscal year. The biggest reason behind the massive decline has been the import bill, which declined by 23% to $31.38 billion during first half of the current fiscal year, according to Pakistan Bureau of Statistics.
Italy-based gas supplier to cut supplies
Country's fuel crisis is expected to only worsen further after Italy-based LNG trading company, ENI stated that it won't be able to deliver its next cargo. Geo News quoted The News, “The gas deficit will soar as imported LNG will reduce to 700 mmcfd as only five cargoes, at the price of 13.37% of Brent, and 2 cargoes, at 10.2% of Brent under GtG agreements with Qatar, would be available in February. There will be no LNG cargo from ENI at the cost of 12.14% in the month of February. And this will increase the gas crisis in the country."
Delay in IMF loan payments
The government has even failed to secure a loan from International Monetary Fund (IMF) after it failed to meet the conditions that prices of petrol and diesel must be hiked further. With no clarity from the government IMF is delaying the approval of its 24th loan and pushing the country into a deeper mess.
Arab World extends helping hand
The Abu Dhabi Fund for Development (ADFD) has extended a grant of $1-billion extra loan in addition to rolling over the existing $2-billion loan, according to Geo News. The SBP currently possesses $4.5 billion dollars in foreign exchange reserves, equal to three weeks' worth of import bills at the central bank.
Advice from Pak's richest businessman
Pakistan's richest businessman, Miya Masha, termed country's Ambani has asked the country to end its stubborn attitude and restart business negotiations with India by opening borders. He also asked the authorities to crack a deal with IMF at the earliest to avert the impending crisis and do all they can to attract foreign investors.
