A Technical Analysis
This article analyzes the complete ongoing collapse of Pakistan’s economy. The 2022-2023 Pakistan economic crisis is an ongoing economic crisis and part of 2022-2023 political unrest in Pakistan. It has caused severe economic challenges for months due to which food, gas and oil prices have risen
image Source : Awami Workers party / twitter
What Is Pakistan?
Pakistan, officially the Islamic Republic of Pakistan, is a country in South Asia. It is the world’s fifth-most populous country, with a population of almost 243 million people, Over the past two decades, Pakistan has achieved significant poverty reduction, but human development outcomes have lagged, while economic growth has remained volatile and slow,” the World Bank said in its report released in October last year.
According to Indian strategic affairs specialist : Sushant Sareen
Pakistan has doubled its debt roughly every five years over the last 25-year period. Starting from a debt of Rs. 3.06 trillion at the beginning of the General Musharraf regime in 1999, the debt stood at Rs. 62.5 trillion at the end of the Imran Khan government in 2022.
While the debt grew at around 14 percent per year on average, the GDP was growing at only 3 percent per year on average. This led to an unsustainable debt burden. In the fiscal year 2022–23, the debt servicing obligations of Rs. 5.2 trillion exceed the entire federal government revenue.
Pakistan’s economic crisis was at the center of a political standoff between Prime Minister Shahbaz Sharif and his predecessor Imran Khan in 2022, which led to Khan’s ouster in April 2022. Sharif accused Khan of economic mismanagement and mishandling of the country’s foreign policy, forcing him to step down in a no-confidence vote.
Amid ousting, he ignited Haqeeqi Azaadi political movement which caused nationwide political unrest calling for early elections and civilian supremacy which in result worked as a catalyst for already worsening economic conditions.
During 2019 Imran Khan tried to make a deal with the IMF and agreed to several terms and conditions which resulted in the increase in inflation but Imran Khan failed to gain an IMF loan.
China Blames The West
Chinese officials blamed the West behind Pakistan’s economic crisis, and state media continues to talk about the strengths of the China-Pakistan Economic Corridor. “Only China has given a full plan. From this perspective, it is the Western world that ‘abandoned’ Pakistan, and China is the one that extended a helping hand. And if Pakistan wants complete self-help, it cannot completely rely on China, it still has to fight for itself,” wrote Liu Qingbin, senior researcher at the China Digital Economy Institute.
The US has expressed serious concerns about Pakistan’s debt to China. “We have been very clear about our concerns not just here in Pakistan, but elsewhere all around the world about Chinese debt, or debt owed to China,” said US State Department Counselor Derek Chollet during his visit to Islamabad on 15 February 2023.
Excessive external borrowings by the country over the years raised the specter of default, causing the currency to fall and making imports more expensive in relative terms.
Pakistan should aim to improve the livability of its cities and provide access to quality public services such as affordable housing, reliable water supply and other public services. Green public spaces must be developed, and the education system strengthened to enhance the labor market.
Moving forward, Pakistan will need to prioritize reforms that promote inclusive political and economic institutions, encourage competition and innovation, and invest in human capital development. Only then can Pakistan hope to achieve sustained economic growth and development. A country should always be forward thinking and practical.