KARACHI: Pakistan is facing a major economic crisis triggered by a series of corrupt and failed governments, military coups, rising international debts, no major exports, and a major class divide, Asian Lite reported.
Pakistan's economy has been pushed to the brink of collapse, exacerbated by a global energy crisis and devastating floods that submerged a third of the country in 2022.
The country has reportedly doubled its debt roughly every five years over the last 25-year period. Prices are going up and the government has failed to provide basic amenities like gas and power, the report said.
Pakistan's year-on-year inflation hit 35.37 per cent in March -- the highest in nearly five decades.
The South Asian nation -- home to more than 220 million -- is deep in debt and must enact tough tax reforms and push up utility prices if it hopes to unlock another tranche of a $6.5 billion IMF bailout and avoid defaulting.
Month-on-month inflation was 3.72 per cent, according to government data released Saturday, while the average inflation rate for the past year was 27.26 per cent.
The country needs billions of dollars of financing to service existing debt, while foreign exchange reserves have dwindled and the rupee is in freefall.
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Poor Pakistanis feeling the brunt of the economic turmoil
At least 21 people have been killed since the start of the Muslim fasting month of Ramadan in crowd crushes at food distribution centres.
At least 11 women and children were killed in a deadly stampede at a Ramadan food and cash distribution center in Pakistan’s southern port city of Karachi on Friday.
The stampede happened when hundreds of women and children panicked and started pushing each other to collect food outside a factory in a well-known industrial area, known as SITE or Sindh Industrial and Trading Estate.
As the stampede began, some women and children fell into an open drain, local police official Mughees Hashmi said. Residents said a wall also collapsed near the drain, injuring and killing people. The incident left the street that leads to the factory littered with wounded people and dead bodies.
Cash-strapped Pakistan launched an initiative to distribute free flour among low-income families to ease the impact of record-breaking inflation and soaring poverty during the holy month.
In March, a resident of Surjani town, living in a rented house with his wife and two daughters aged four and two, was forced by the rising inflation and unemployment to attempt suicide. The 40-year-old man was the sole earning member of the family. The man administered a poisonous substance to himself and his three family members. Dawn reported that the two-year-old passed away.
In March, a labourer in Punjab's Narowal jumped into a canal with his two children. In another incident, a man in Muzaffargarh reeling under inflation jumped into a canal with his four-year-old daughter.
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Inflation woes rise
"The way inflation is rising, I believe a famine-like situation has been simmering," said Shahida Wizarat, a Karachi-based analyst, as quoted by AFP.
Inflation is expected to stay at "elevated" levels, the finance ministry said, "owing to market frictions caused by relative demand and supply gap of essential items, exchange rate depreciation and recent upward adjustment of administered prices of petrol and diesel."
Meanwhile, the Pakistani currency sank to a record low on March 20, 2023, closing at PKR 284.03 as against the US Dollar, according to data made public by the State Bank of Pakistan (SBP). The latest decline in the value of the Pakistani currency amounts to a depreciation of PKR 2.32 or 0.82 per cent from the previous week.
Compared with Indian currency, the Pakistan rupee appears to be over three times weaker. As on March 21, 1 INR = 3.407116 PKR. This means that it would cost over 3 PKR for a customer to buy a commodity worth 1 INR.
Debt-laden Pakistan's decision to curb trade deficit by restricting imports has been causing losses to its economy and rapidly evolving it into a bigger crisis of rising unemployment, according to Dawn.
According to eminent economist Hafiz A Pasha, the number of unemployed people in the country is likely to rise by over 2 to 8 million by the end of 2022-23. Pasha observed that the unemployment rate will approach 10 per cent 'probably for the first time.'
An increasing number of enterprises are either scaling down operations or closing production mainly due to the scarcity of imported raw materials. Dozens of businesses have served notices of production suspension.
Among other hardest hit are those affected by the shortage of X-ray films. Even a soap maker observed that his factory had been shut down for months and that the banks were not clearing his letter of credit for oil that was used as a natural perfume in very small quantities.
Ghandhara Tyre & Rubber Company Limited (earlier known as General Tyre and Rubber Company) has notified a series of non-production days (NPDs) for March 2023 because of the ongoing economic crisis and diminished demand.
Foreign exchange shortages and component supply problems have been choking the local automobile industry. As a result, car sales slumped last month due to reduced production and demand. The latest information from Pakistan Automotive Manufacturers Association (PAMA) shows that carmakers (association members only) collectively sold only 5,762 vehicles in February 2023, marking a month-over-month (MoM) slump of 47 per cent but a year-over-year (YoY) decline of 73 per cent.
The local currency instability and tax hikes has forced the car industry to raise prices. Various major carmakers including Kia, Peugeot, Toyota, Haval, etc, increased the prices of their vehicles by considerable margins.
With these developments becoming frequent, the auto industry's prospects in Pakistan appear rather unpromising.
Already reeling under a crippling debt crisis, the South Asian nation suffered from a devastating flood last year which left huge swathes of farmlands submerged, leading to severe food scarcity.
Things are so bad, said Burhan, an electrician in Islamabad, the capital, that he is grateful if his six children manage even one meal a day. The inflation has risen so high in the last few months that I am left scrambling to manage either my rent or pay my utility bills, the 45-year-old told Al Jazeera.
Meanwhile, people are also facing challenges fulfilling their religious duties due to severe gas load-shedding, reported Jang. They could not prepare Sahri (the meal eaten early morning before fasting during Ramazan) due to the gas shutdown, according to media reports.
(With inputs from ANI, AFP, and AP)