Pakistan’s top finance figure, Muhammad Aurangzeb, has turned his office into a mobile mission. In one week he is in Washington talking to the International Monetary Fund (IMF) about new emergency loans, and the next he flies to Riyadh or Abu Dhabi to pitch the sale of state assets like Pakistan International Airlines (PIA) and key energy projects.
These trips show Pakistan’s financial crunch isn’t a distant story—it’s happening right now. The country has been borrowing to stay afloat for years, but the pressure has shifted toward selling parts of its public sector to keep the economy breathing.
Pakistan has hovered on the edge of default for over three years. In April 2022 it escaped a sovereign debt crisis, yet inflation shot up to about 38 % in May 2023. Its foreign‑exchange reserves collapsed to just $8.7 billion in February 2023, and today the reserves sit at roughly $19 billion—enough to cover less than two months of imports.
External debt has stayed above $130 billion for more than a year, while the rupee has slipped past 285 PKR per US dollar. Energy prices are also climbing: petrol now costs about 265 PKR per litre and diesel 275 PKR per litre. Unemployment is rising to around 8 %, and almost 40 % of Pakistanis live in multidimensional poverty according to the UN Development Programme.
But the root problem isn’t just high debt—it’s the lack of real reform. Since the 1980s, every IMF program has asked Pakistan to cut subsidies, widen the tax base, and improve fiscal transparency. Each time the government promised to follow through, but actual changes remained minimal.
Under Prime Minister Shehbaz Sharif and Finance Minister Aurangzeb, the government still promises “structural transformation.” Yet the tax-to-GDP ratio stays stubbornly low at about 9 %, one of the lowest in Asia. Wealthy elites—feudal landlords, big industrialists, and military‑linked conglomerates—find loopholes to dodge taxes, pushing the burden onto the middle class and ordinary consumers through indirect taxes.
In short, Pakistan is stuck between a looming financial crisis and political inertia. New loans and asset sales provide temporary relief, but without lasting reforms, the country’s economy will continue to struggle.
Source: ianslive
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