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 major class divide. 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 Jang newspaper reported that the people were wondering how to keep the fast and how to break it … A special report by Dr Sakariya Kareem
Karachi was shrouded under a gas load-shedding in the month of Ramadan. The citizens couldn’t prepare Sahrī due to the gas shutdown and low supply, and the pakoras and samosas were left raw even in Iftar. The Jang reported that the people were wondering how to keep the fast and how to break it.
A 40-year-old man died and several others were wounded in a stampede during the distribution of free government flour in Charsadda. According to sources, a stampede had broken out during the distribution of free government flour in the market of Charsadda, injuring several people.
A resident of Surjani town living in a rented house with his young wife and two infant daughters was forced by the rising inflation and unemployment to attempt suicide. He was the sole earning member of the family. The man and three family members attempted suicide by consuming a poisonous substance. Unfortunately, according to a report in Dawn, the situation took his two-year-old daughter’s life. Similar heart-wrenching incidents are happening in different areas of cash-strapped Pakistan. Last month, a labourer in Punjab’s Narowal along with two children, committed suicide by jumping into a canal. In another incident, a man in Muzaffargarh reeling under inflationary pressure committed suicide along with his four-year-old daughter.
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 Rs 2.32 or 0.82 per cent from the previous week. When compared with the 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. The record low for the Pakistani rupee coincides with the country facing delay in securing critical funding from the International Monetary Fund (IMF).
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 major class divide. The country has reportedly doubled its debt roughly every five years over the last 25-year period.
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 a March 19 report published in The Dawn.
According to eminent economist Hafiz A Pasha, the quantity 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 percent ‘probably for the first time.’
An increasing number of enterprises are either scaling down operations or closing production mainly for scarcity of imported raw materials. Dozens of businesses have served notices of production suspension. Restriction on imports of raw materials to improve the trade balance amounts to cutting one’s nose to spite one’s face, reported The Dawn newspaper.
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 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% but a year-over-year (YoY) decline of 73%.
The local currency instability and tax hikes 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. Households across Pakistan have been battered by a rising inflation rate, which in February was the highest in the last fifty years.
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 a 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.
On the eve of Ramadan, Burhan was despairing. He depends on state-subsidised flour. Even that has become more expensive. A 20-kilo flour bag which was earlier available for PKR 600 (US $2.10) now costs PKR 1,100 (US $3.90), he said. His work is contingent on construction projects, which have declined along with the broader economy. He sold off his car. It was not sufficient. He had to take his three children out of private schools and send them to government schools which cost less. He is now worried about how to meet his children’s expectations in the lead-up to Eid al-Fitr. I will be happy if I can put something on the table every evening, he said. He can no longer buy new clothes for any of my children.
Sajid Amin, who works at the Sustainable Development Policy Institute, a research agency in Islamabad, said the persistent “political chaos” in the country was also reducing the government’s capacity to respond to the crisis. What we had earlier was political instability but it has now turned into chaos, Amin said. The government, he said, is unable to keep food prices in check.
The worst condition of Pakistan’s economic crisis during Ramadan can be seen in the inflation hitting an all-time high, causing prices of essential commodities to skyrocket such as food and clothing, cooking fuel making it difficult for the common people to afford the expenses during the holy month. Moreover, power outages have made it difficult for people to fast and perform religious obligations.