Original Article Written and Edited by Dr. Anoop Prathapan and first published online on the 8th of February 2023.
Pakistan is a country in South Asia that has a population of over 220 million people, predominantly Muslims. The rest of the population comprises a minority of Hindus and Christians and a sizable number of Sikhs in the torn Punjab. It has a rich cultural legacy, diverse topography, and a strategically important location in the Indian subcontinent. Agriculture has been the backbone of the Pakistani economy at all times. The country has been facing many challenges in the socio-political and economic spheres recently. Politically, Pakistan has been grappling with issues such as corruption, political instability, and a weak democratic system since its inception post-partition. There have been frequent changes in government, with umpteen military interventions taking place in the past. Though Pakistan holds the merit that it is the first Islamic Republic with a lady at its highest office (when Benazir Bhutto assumed charge of the Prime Minister of Pakistan in 1988), it has been so unlucky a state that none of its eighteen Prime Ministers over the past 70 years have been able to complete one full term of five years in office.
The current economic status of Pakistan is a matter of great value and chicanery, with a surfeit of components contributing to its current state of affairs. One of the most salient issues currently plaguing the Pakistani economy is its persistent balance of trade deficit. Pakistan is the country with the world’s lowest tax-to-GDP ratio. This is primarily because of the country's high import-to-export ratio, with imports consistently outstripping exports. This has resulted in a dearth of foreign exchange reserves and a dependence on borrowing from international financial institutions like the IMF. At the moment the foreign exchange reserves of Pakistan are said to be just a little less than 3.7 billion USD which is a bare minimum for a country and population of that size, to sustain imports for more than three weeks. The Hindu reports more than a thousand containers of food, medicines and other essential supplies held up in the Karachi port, unable to be released due to lack of money. The challenges that Pakistan faces currently, including a high poverty rate, unemployment, and a large trade deficit, could be attributed to gross administrative mismanagement and over-dependence on religious clerics for forming administrative decisions. Despite being rich in natural resources, the country has struggled to develop a strong and diversified economy compared to India which laid roads and developed strategically and economically a lot more, over the same period of 75 years post-independence.
A lot needs to be done to ensure that women In Pakistan have equal opportunities and are protected from bigotry and brutality. Civil society organizations and human rights groups have played a crucial role in advocating for women's rights and raising awareness about the issues facing women in Pakistan. Through their efforts, they have been able to bring attention to these important issues and push for change.
Pakistan is grappling with terrorism and extremism. For many years, the country has been the target of terrorist attacks, which have caused widespread death and destruction. The government has taken steps to combat terrorism, including military operations in some parts of the country and efforts to counter extremism through education and awareness programs. Currently, the Tehrek-e-Taliban Pakistan (TTP) which is a combination of three extremist groups - the Pakistani Wing of the Afghanistan-Taliban, Al Quaeda, and a wing of ISIS, has reportedly taken over control of North West Frontier province a.k.a., Khyber Pakhtunkhwa (KP). The recent suicide attack on a mosque in Peshawar, the capital of KP, once known as the city of flowers, leading to the death of 100+ innocent people including Government officials, reinforces this information.
The education sector in Pakistan is making slow progress as compared to other developing nations. Pakistan’s antiquated education system does not allow interactions across diverse groups or campuses, leading to intolerance, and in some cases, radicalization. The government has implemented reforms aimed at improving the quality of education and increasing access to it, particularly in rural areas. This is an important step towards creating a knowledgeable and skilled workforce, which will be crucial for the country's future economic growth and development. It is a pity that even 75 years after its inception, more than half of Pakistanis do not read or write.
Another major contributor to Pakistan's economic woes is its high rate of inflation. The Ministry of Finance, Pakistan has stated that the current rate of inflation in Pakistan is around 27.55% as of January 2023 which is a 48-year high, since 1975. This is partly because of exogenous factors, such as rising global oil prices, but also because of endogenous factors, such as monetary wrongdoings by the Pakistan Central Bank. The high rate of inflation has led to a decrease in consumer purchasing power and a decline in overall economic growth. The inflation has caused prices of commodities to rise to such an extent that a kilogram of flour costs Rs. 3,000, wheat Rs 200, big onion Rs 500, petrol and diesel Rs, 249 and Rs. 262 respectively. To sum it up 1 USD sells at Rs. 260. (all amounts in PKR) The recent heavily destructive 2022 floods that killed 1,739 people and destroyed crops worth millions of Rupees have rubbed salt over existing wounds. Fiscal deterioration is imminent in the forthcoming financial year and amidst this is the governance burdened to provide relief to the flood-stricken people. The scene is so pitiable that UNICEF reports 40 children in the Baloch and Sindh areas to be living near stinking water sources.
An important facet contributing to the current status of Pakistan is its relationship with its neighbours. Pakistan shares borders with Afghanistan, Iran, and India, and its relationship with these countries has a significant impact on its stability and security. Pakistan's relationship with Afghanistan has been strained in recent years, because of the conflict in Afghanistan and militant groups operating along the border between the two countries. Nevertheless, both countries have expressed a desire to improve relations and work together to address the common threat of terrorism and extremism. Pakistan has a pre-existent good relationship with Iran, with both countries cooperating on various issues, including energy and trade.
Pakistan has had an unsettled relationship with India, having fought multiple wars and engaging in a long-standing dispute over the region of Kashmir. Almost all the peace-making attempts have been full-stopped after the Government of India withdrew Article 370, and the Pakistan government has been adamant that they shall encourage any bilateral talks only after India reinstates the withdrawn Article.
Pakistan's high unemployment rate is also a significant issue. The lack of job opportunities, particularly for the country's youth, has resulted in a brain drain and a lack of human capital development. This has in turn hindered the country's economic growth and development.
The country's energy sector is also in dire straits, with a lack of investment in the sector leading to chronic power shortages across the country. The directive of the government to close all activity by 8.30 pm, especially in major cities, should be read as part of the pitiful status with regards Pakistan’s energy production and reserve. This has led to a decrease in industrial production and a decrease in overall economic growth. Almost 90% of the textile industry in the country is on the verge of a total shutdown. Pakistan woke up to no electricity for almost 24 hours on January 23, 2023, and the mob eventually took to the streets unable to tolerate the circumstances. Furthermore, the country's political instability and security issues have also had a detrimental effect on the economy. The ongoing conflict with neighbouring India, as well as the ongoing war on terror, has led to a decrease in foreign investment and a decrease in overall economic growth.
Despite these challenges, the government of Pakistan has implemented several economic reforms aimed at addressing these issues. The government has implemented several austerity measures, such as cutting government spending and raising taxes, in an effort to decrease the budget deficit. But such clauses shall not revive the country any sooner. The IMF has put forward strict corrective steps to be implemented before they said they could fund the country anymore. Additionally, the government has also implemented several structural reforms, such as labour market reforms and privatization of state-owned enterprises, in an effort to increase the efficiency of the economy.
In conclusion, the current economic status of Pakistan is complex, with a glut of factors contributing to its current state. The country faces several economic challenges, such as a relentless balance of trade deficit, high inflation, high unemployment, energy sector issues, and political instability.
While it will take time for the corrective reforms to take effect and for the economy to improve, the government needs to continue to implement sound economic policies to lay the foundation for sustained economic growth and development in the future. Containing terror and restoring peace in Baloch and Sindh regions is of utmost importance to the country. Reinstating trade with India and reinstating free movement across borders is something to be considered with utmost priority if Pakistan needs to sustain itself.
Overall, while Pakistan faces many challenges in the socio-political and economic spheres, there are also many positive developments taking place, and once the efforts are channeled the right way, the country has the potential to become a stable, prosperous, and influential player in the region.
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