New Delhi: The steep escalation in the import bill has resulted in Pakistan losing 50 per cent of its foreign exchange reserves in the last few months.
One reason is post-Covid ramifications. But another reason is debatably also important.
The hostilities between Russia and Ukraine have pushed Pakistan to face severe external account pressures.
The crisis is getting bigger by the day for Pakistan.
“Pakistan is not Sri Lanka. The island country was badly hit by Covid as their income from tourism dried up,” said Acting Governor State Bank of Pakistan (SBP) Dr Murtaza Syed.
He maintained that the tourism-based economy failed to fight off the challenges. For two years, authorities in Sri Lanka allowed the budget deficit to increase.
He admitted – “There is no doubt that the economy is facing challenges and the economies of many countries are in trouble due to commodity high prices after Covid. Sri Lanks is one of them, but they did not manage well and took some wrong or late decisions”.
“Given this tumultuous history of capital cities, will Islamabad too suffer the same fate? The answer lies in whether the current government will be given the time, support and space to implement some important economic decisions that are urgently required to prevent the economy from spiralling out of control,” wrote expert Aqdas Afzal in an article for ‘Dawn’ newspaper.
But the State Bank Governor maintained that Pakistanis never defaulted with the IMF before and will not default this time too.
Dr Syed said that talks with the IMF were in the right direction.
“We should know that the IMF suggests what is good for an economy. What the IMF is saying about Pakistan is that the subsidy on oil was not affordable for the Pakistan economy as the country does not have enough resources”.
The Pakistan government has increased the prices of petroleum products by another Rs 30 per litre in a move aimed at reviving the stalled IMF programme. The government has raised petrol prices by Rs 60 since May 26. The opposition parties are, however, not taking things lightly.
Former Pak PM Imran Khan castigated the government for bowing down to the International Monetary Fund (IMF) while Prime Minister Shehbaz Sharif called on the privileged classes to make sacrifices and “adopt simplicity”.