Pakistan's caretaker Prime Minister, Anwaarul Haq Kakar, expressed confidence that the country will overcome its economic challenges, emphasizing the need to bring the undocumented economy into the tax net and invest in human resources, during an interaction with a delegation of students from Harvard. He also discussed Pakistan's role in the USSR-Afghan war, highlighted the importance of democracy and emphasized the desire to establish a collaborative partnership with the US.
Protests have erupted across Pakistan due to the recent increase in electricity prices, which are causing financial strain on households already dealing with high inflation and stagnant incomes, and the government's inefficiency in reducing transmission losses and indirect taxes is exacerbating the problem.
The recent increase in energy prices in Pakistan has led to protests over high inflation and electricity bills, with demonstrators burning utility bills, blocking highways, and attacking power company offices. The caretaker government has refused to lower energy prices without approval from the IMF, and has further increased petrol and diesel prices by over 14 Pakistani Rupees (PKR), surpassing PKR 300.
Pakistani traders go on strike across the country to protest against the high cost of living, including fuel and utility bills and the depreciation of the rupee, leading to widespread discontent among the public.
Former finance minister Ishaq Dar believes that a few speculators are responsible for the fluctuation and rise of the US dollar against the Pakistani rupee and that the government must take action against them to prevent them from holding the economy hostage. He also states that there is no quick fix to any problem, and emphasizes the need for the revival of effective policies and time to reverse the damage caused to Pakistan's economy. Additionally, Dar criticizes the policies of the Pakistan Tehreek-e-Insaf (PTI) government and expresses confidence in the ability of the Pakistan Muslim League-Nawaz (PML-N) to fix the economy if given a fresh and full mandate. He also highlights the complexities of the rise in electricity prices in the country.
The current economic crisis in Pakistan is driven by high inflation, mismanaged policies, and failure to ensure price stability, leading to a weakened currency and a struggling middle class, but implementing radical reforms such as demonetization and swapping out foreign currency debt can potentially alleviate the situation and revive the economy.
The high prices of electricity in Pakistan are a result of misgovernance in the power sector, including indirect taxes, losses in the system, expensive production, and the cost of generating electricity in new plants.
The caretaker government in Pakistan plans to provide relief to power consumers, with a reduction of Rs13,000 for those with bills ranging from Rs60,000 to Rs70,000, amid nationwide protests over increased electricity bills; talks between the government and the IMF are underway on the matter.
The main problem with electricity consumption in Pakistan is that households, rather than productive sectors like industry, are the main consumers, leading to high bills and a lack of economic growth.
Pakistan's ongoing economic woes, including budget deficits, trade deficits, and foreign exchange shortages, are not solely caused by corruption but rather a lack of will from leaders to implement necessary solutions and prioritize economic growth, such as increased productivity, better-managed state finances, and global competitiveness, while shedding unproductive state-owned enterprises. The country must also embrace economic pragmatism by opening trade with all countries, investing in human capital, and avoiding ideological distractions to achieve economic modernization.
Millions of Pakistanis are facing the devastating consequences of an unprecedented economic crisis, with rising inflation, soaring fuel and electricity prices, and a weakening currency, leaving low-income households struggling to make ends meet.
The Pakistani rupee's rise against the dollar is attributed to a crackdown on hoarding and illegal outflows of the greenback as well as increased vigilance in the Afghan transit trade.
The Pakistani military's crackdown on the black market has led to a significant influx of dollars into the interbank and open markets, resulting in the recovery of the Pakistan rupee and its strengthening beyond the official rate, with the campaign being credited to army chief General Asim Munir.
The worsening economic situation in Pakistan is causing the poor, honest, and innocent people to struggle to survive, leading to dire consequences.
Pakistan's poverty rate has risen to 39.4% with 12.5 million more people falling below the poverty line, prompting the World Bank to urge the country to take urgent steps to achieve financial stability by taxing agriculture and real estate and cutting wasteful expenditures.
Pakistan is facing a major economic crisis with high inflation, insufficient public resources, and policy decisions influenced by vested interests, according to the World Bank. The country needs to make hard choices and prioritize coordinated, efficient, and adequately financed service delivery to improve human development outcomes. Additionally, the Pakistani Rupee has reached a record low against the US dollar.
Pakistan is facing a deep economic crisis that has negatively impacted living standards, the private sector, and the environment, and the World Bank argues that urgent policy shifts are needed to address low quality basic services, improve fiscal management, create a more dynamic and open economy, and address failures and distortions in the agri-food and energy sectors.
The World Bank warns that Pakistan is facing mounting woes and economic hardships, including inflation, rising electricity prices, severe climate shocks, and a 'silent' human capital crisis, while urging the incoming government to make crucial decisions themselves.
Stefan Dercon, a visiting professor at Oxford University, says that Pakistan's elite must change in order to revive the economy and reduce dependence on foreign currency inflows, as maintaining the status quo will not provide a solution, and the IMF and other bilateral donors will not rescue the ailing economy.
The author argues that there are underlying pressures responsible for an ongoing spiral of devaluation in Pakistan's economy, and these pressures make it difficult to sustain recent gains in the value of the rupee.
The high cost of electricity in Pakistan is due to poor governance, policy lapses, volatile global energy prices, and rupee devaluation, leading to inflated energy costs, a lack of dispatching excess power to consumers, and inadequate transmission and distribution systems; to address these issues, the government should implement a multifaceted strategy that includes shifting to local renewable energy sources, upgrading and modernizing the power supply network, promoting energy efficiency and conservation measures, and offering subsidies and tax exemptions for renewable energy technologies.
Illegal activities such as black market currency trade, gold smuggling, and oil smuggling are costing Pakistan's economy USD 23 billion per year, leading to currency devaluation, inflation, and a loss of government revenue.
Pakistan is facing a social and economic crisis, with challenges such as low foreign direct investment, decreasing exports, high debt, inflation, and lagging development, and policymakers need to take decisive action to address these issues and prioritize national interests and security, including political stability, diplomatic initiatives with neighboring countries, and investment promotion measures.
Pakistan's economy is in dire straits, heavily reliant on external assistance and loans, with rising inflation, high poverty rates, and a plummeting Human Development Index, yet the country's military-owned enterprises continue to thrive, maintaining extraordinary financial control and leveraging their autonomy for corruption and lack of accountability.
