Economic woes in pakistan

23 June 2022 - The economy of Pakistan is currently undergoing a severe economic crisis. The cost of essential goods such as food, oil and gas have risen rapidly. Several Pakistani cities are experiencing blackouts as the country faces electricity shortage issues as well. In addition to this, the Pakistani rupee has depreciated and now the country is in dire need of foreign exchange reserves as well. 

According to a Reuters report, “funds held by the central bank have dropped to about $10 billion in May from $16.3 billion at the end of February”. As a result, Ahsan Iqbal, the Federal Minister for Planning and Development, has repeatedly encouraged citizens to reduce their consumption of tea and requested businesses to close earlier to save electricity. This is to reduce the amount spent by the economy on imports of tea. These announcements have been met with much displeasure and criticism from social media users in Pakistan. Furthermore, officials have declared a reduction in imports of non-essential luxury goods to reduce costs, as the imports are done by taking a loan. These include imports of cars, mobile phones, cosmetics, toiletries and cigarettes. However, critics have stated that these measures may not be very useful as they have been introduced too late to have any significant effect. 

As a solution, Pakistan has recently signed an agreement for a $2.3 billion loan from China to make up for its depleting reserves of foreign exchange, which fell below USD 9 billion on 10 June. This is expected to aid in import payments and prevent the rupee from depreciating in value any further. Moreover, Pakistan has also come to an agreement with the International Monetary Fund for an assistance of USD 6 billion to help dwindling cash reserves. 

Although the country may be facing serious financial and energy crises, the recent developments may offer a much-needed ray of hope for the Pakistani people. Take our survey on cost of living and contribute to wage information in Pakistan.