Pakistan is going through a continuous economic crisis
New Delhi:
Pakistan is copying Sri Lanka while trying to solve its economic crisis, its past mistakes as well as presently the Pakistan government is not paying attention to the happenings at the domestic level. At the same time, Pakistan is ignoring the lessons it could have learned from Sri Lanka. According to the True Ceylon report, Pakistan, like Sri Lanka, continues to weaken economically as a result of ambitious political leadership and excessive external borrowing. It is possible that in the coming times, like Sri Lanka, Pakistan may also face a crisis like shortage of foreign exchange reserves, food, fuel and medicines.
5 big reasons
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Like Sri Lanka, Pakistan too has borrowed heavily from its ‘all-weather friend’ China at commercial rates. In the grip of ‘debt trap’.
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The dependence of Pakistan’s economy is very high on imports. It has to depend on other countries for both food and fuel. Rising global prices have resulted in a huge increase in the import bill in Pakistan. Due to which the foreign exchange reserves are decreasing rapidly in Pakistan. The import bill of petroleum products alone has registered a jump of about 95 percent in the first ten months of the financial year 2021-22.
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As a result of the fall in foreign investment, there has been a severe shortage of dollars in the country and at the same time the value of Pakistani rupee is also falling sharply against the dollar. This is exactly like the depreciation of Sri Lankan rupee in March 2022.
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Since coming into existence, Pakistan has taken help from the IMF 22 times to overcome its economic crisis. The last time aid was given to Pakistan by the IMF was in 2019. At the same time, the government of Pakistan is not serious on the issue of reducing the huge subsidy announced for petrol and diesel in recent times. In such a situation, there is little hope of getting help from the IMF to come out of the economic crisis. These mistakes are just like Sri Lanka.
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Due to the deteriorating security situation in the country as well as the ongoing political turmoil, there is a significant decline in foreign investment. Both foreign direct investment and foreign portfolio investment are going out of the country. Due to which also there is a decline in foreign exchange reserves.
