Anjali Sharma
GG News Bureau
WASHINGTON DC, 4th May. According to the experts and news media reports on Friday the fears that Pakistan is moving towards a complete economic meltdown are rising in the country.
The notion originates from multiple factors including slow economic growth, ever-increasing external debts, continuing bailout programmes, lack of cohesion between institutions, absence of clear and firm direction from the leadership and serious political differences among political parties, who are engaged in a paralyzing confrontation, which drains most of the energy and creates doubts over credibility and legitimacy, the report said.
The increasing spread of militancy, political uncertainty and an escalating dominance of Pakitan’s military establishment over a democratically-elected government, with the suppression of other political parties, its workers and the overall political freedom, has further intensified the country’s woes.
It is because of these factors that Pakistan finds itself in a bad fix and is deemed unfit and unequipped to handle the challenges.
According to UNDP report Pakistan lags behind much of the world and most of its neighbors in human development and economic indicators.
It stuck in a spiraling debt cycle as the government is looking at other countries to seek short-term loans or extensions of its existing external debts.
Pakistan newly elected Finance Minister Muhammad Aurangzeb was in Washington D.C., at the annual IMF summit, seeking a bailout programme worth $10 billion.
Upon his return, he said that the IMF was “very receptive” to considering a “larger-longer programme”.
The efforts have been forced to seek external financing in terms of investments, through privatization and bailout programmes, completely being blind to the pivotal factors that lack progress and development.
Labour productivity, one of the most critical and crucial factors for economic prosperity, has remained among the world’s lowest for the past three decades in the country.
In comparison with the regional neighbors, Pakistan’s labor productivity growth has hovered 1.3 per cent per annum while all of its neighboring countries have remained well ahead.
The report indicated that between1990 to 2018, China tops the labor productivity race with a robust growth percentage of 8.12 per cent, India stood at 4.72 per cent and Bangladesh achieved a growth rate of 3.88 per cent.
In contrast to its neighbors, Pakistan has seen a major decline in labor productivity in at least 6 out of 12 sectors including mining, utilities, transport, real estate, construction and trade.
Because of snail-paced progress in important sectors, policymakers have been compelled to rely on external debt to secure economic progress.
In January 2024, the State Bank of Pakistan stated that the country’s external debt servicing obligation is about $29 billion over the next 12 months, amounted to 45 per cent of the country’s dollar earnings.
Pakistan has introduced the Special Investment Facilitation Council a new platform to provide better, easier, and faster business facilitation for foreign direct investments.
The formation of SIFC with additional powers to the Army Chief General Asim Munir over financial matters is a step taken to provide a one-stop shop solution to investing countries and companies and provide ease of doing business; many believe that its formation is “ill-timed”, insisted that formation of a council with additional powers would be counter-productive and would further increase uncertainty.
The experts warned that the current path Pakistan is on presents serious risks and threatens complete chaos, adding that the country is on the edge of a collapse, and any wrong move now, can result in a disaster.
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