Despite the approval of a loan from the International Monetary Fund, the allied countries are not willing to give money to Pakistan. The rupee continues to lose value. The risk is not only of a food crisis due to the destruction of crops: the country could end up unable to import oil.
Islamabad ( / Agencies) – Financing from the International Monetary Fund (IMF) is not enough for Pakistan’s economy to pick up. That is what several experts consulted by Asian Nikkeiaccording to which more radical emergency measures are necessary.
The recent floods have put the Pakistani government in a difficult situation. Damage is estimated at $30 billion. In addition, a food crisis could soon occur. Analyst Maryam Zia Baloch argues that, with crops destroyed by floods, Pakistan will be forced to export less and import more food: “The country will need more dollars to cover import costs. This will definitely put pressure on the exchange rate and the trade balance situation will worsen,” he explained.
At the end of August, the IMF had approved a loan of 1,170 million dollars, which in turn was supposed to push other countries to offer financial aid to avoid Pakistan’s economic collapse.
The United Arab Emirates and Qatar refused to transfer funds directly to the State Bank of Pakistan. Instead, they chose to make investments that, however, will produce their long-term effects. On the other hand, Saudi Arabia has agreed to renew a $3 billion deposit for another year. But still, Pakistan’s economic problems are unlikely to find a solution.
According to the economist Yousuf Nazar, foreign countries are tired of helping Pakistan, and the proof is that the international community has only promised 600 million dollars of aid for the flooded populations of Sindh and Balochistan.
The Pakistani rupee has continued to lose value in the last two weeks, taking the exchange rate to 239 against the dollar. Inflation reached 27.3%, the highest rate in 47 years. Foreign exchange reserves are very low and the devaluation of the rupee does not attract investment.
Nazar suggested a series of recommendations to revive the economy, including cutting defense spending, raising fuel prices and resuming trade with India and Iran. But Islamabad’s main concern should be energy supply: if Pakistan runs out of money to buy oil, the country could be “crippled”. Inflation could climb to 70%, as in Sri Lanka. “You can’t wait until you hit rock bottom; that would be the wrong strategy,” says Nazar. “Pakistan must act now, instead of waiting for help from its allies,” he said. “Hope is not a strategy.”
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