Pakistan Economic Crisis: No rupee, no dollar and no oil in petrol pumps.. know how close Pakistan is to bankruptcy

Terrorism drowned the economy

Pakistan’s former ambassador to the US Hussain Haqqani said that terrorism has stopped FDI in Pakistan. Also, its unrealistic dependence on China has buried it under the burden of debt. He said poor relations with Afghanistan and India have limited business opportunities for Pakistan. Global strategic experts also say that Pakistan is facing an unprecedented diplomatic and political crisis. Now even Pakistan’s friends in the Islamic world feel that it has to put its own house in order first. Radical Islamic groups have to be stopped from using his land. Let us understand with some points that how is the economic condition of Pakistan at present.

1. Close to bankruptcy
The world’s fifth most populous country is close to bankruptcy, following Sri Lanka and Venezuela.

2. Pakistani rupee reaching Patal
The Pakistani rupee is continuously falling against the dollar. It has fallen to 275 against the dollar.

3. Inflation at its peak
Inflation in Pakistan has reached a 50-year high. In January 2023, the Consumer Price Index increased by 27.6%. At the same time, the wholesale price index increased to 28.5%.

4. Foreign Exchange Reserves
Foreign exchange reserves are continuously falling. It has remained less than $ 3 billion. This cannot even cover one month’s imports.

5. Crying inflation
Inflation is bad. There has been a huge increase in the prices of essential commodities like wheat, onions, gas cylinders etc. The average price of a 20 kg bag of wheat flour in January 2022 was PKR 1,164.8. It increased by 50% to reach PKR 1,736.5 in January 2023.

6. 5,000 note will be closed
The Pakistan Business Council has suggested demonetisation of the Rs 5,000 note to stabilize the economy.

7. Bailout package not received
Pakistan was hopeful that it would get a bailout package of $1.1 billion from the IMF. But the talks with the IMF did not succeed. The purpose of this bailout package was to prevent Pakistan from going bankrupt.

8. Apprehension of default
Pakistan is expected to default on its external liabilities. Funds from the IMF could have stopped this, but it did not, but it would have increased the inflation very much. Pakistan signed an IMF program worth $6 billion in 2019. It was increased to $7 billion last year. Pakistan is in its 13th bailout from the IMF since the late 1980s.

9. Dried up petrol pumps
There is no petrol in the pumps of Pakistan. Most petrol pumps in Pakistan’s Punjab region ran out of petrol last month. Due to this the daily routine of the people has been disrupted. Pakistan Petroleum Dealers Association (PPDA) said, “Out of total 450 pumps in Lahore, about 70 are dry. The areas where pumps are closed due to shortage of petrol include Shahdara, Wagah, Liton Road and Jain Mandar. Significantly, the oil companies of Pakistan are on the verge of collapse due to economic crisis and falling currency.

10. Power Outage
Last month, Pakistan faced a nationwide power outage due to breakdown of the “National Grid”. No power was reported in Karachi, Islamabad, Lahore and Peshawar.

11. The reason for the economic crisis in Pakistan
Pakistan is heavily dependent on imports. Pakistan’s imports have seen a huge increase and exports have remained largely stable. This has widened the trade deficit in recent years. Pakistan’s exports mainly consist of textiles and agro-related goods and lack technology.

12. Pakistan’s rising debt
Pakistan’s expenses are also increasing. The total debt and liabilities reached 59,697.7 billion Pakistani rupees (89% of GDP) in FY22 due to the high level of borrowing. China accounts for about 35% of the total bilateral debt outstanding to Pakistan as of March 2022.