Pakistan is bankrupt! This was the claim made by former chairman of Pakistan's Federal Board of Revenue Shabbar Zaidi in December as he urged that it is better to recognise the reality than "living in illusion". Those words are now the haunting truth of a cash-strapped Pakistan at the brink of a default as it faces soaring inflation, lack of funds and a fractious political environment. Here is the state of the economy:
Checking the fuel guage
Fuel prices have doubled in the last five months as they reach a record high. Petrol prices in Pakistan were recently increased by PKR 60 in just a week to PKR 209.86, while diesel prices stood at PKR 204.15.
B'oil'ing food prices
Even food prices are taking a toll on the common man. From June onwards, the government increased the rates of ghee by PKR 208 to an all-time high of PKR 555. Cooking oil prices raised by a record PKR 213 to an all-time high of PKR 605 per litre. Pakistan has witnessed a 300 percent increase in edible oil and ghee prices in the past six months.
Lights Out!
It's not just the fuel that is hammering on a usual life in Pakistan. The country is facing power outages of as long as 12 hours in urban areas and for rural areas, it is worst than that. Power plants producing up to 1,980 megawatts of capacity have been shut down due to non-clearance of dues. And there is a domino effect as the unannounced electricity load-shedding has also caused a water crisis in major cities.
Burdening bills
Energy import costs for Pakistan have doubled in the last 10 months due to the geopolitical tensions and a currency that has been the worst-performing in Asia this year. The trade deficit has now touched $45 billion.Adding to the worries, the foreign exchange reserves halved since August last year to $10 billion, enough to cover only two months of imports.
Drastic steps
In a bid to control the power crisis, Pakistan’s government has ended Saturday as a work day for its employees. Markets have been ordered to be shut by 8:30 pm and wedding functions to end at 10 pm. Moreover, it has been proposed to switch off street lights on alternate days. Purchases of new vehicles for use by officials and appliances such as air conditioners will be stopped, the volume of fuel allocated to government offices will be cut by 40% and overseas trips will be halted,.
But as the economy sits at the brink of bankruptcy all eyes on IMF and if it will extend an olive branch once again to rescue Pakistan from a pit it has dug for itself with large subsidies and delayed reforms.
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