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Pakistan witnesses major economic crisis with rupee plummeting as IMF officials visit country
As IMF representatives visit Pakistan to discuss a crucial cash infusion, the rupee is falling, inflation is skyrocketing, and there is a shortage of energy. Pakistan is currently experiencing a huge economic crisis.
In order to avoid backlash before the upcoming elections in October, Prime Minister Shehbaz Sharif resisted the tax increases and subsidy cuts demanded by the International Monetary Fund for months, AFP reported.
However, Islamabad has begun to yield to pressure in recent days as the threat of national insolvency grows and no friendly nations are willing to offer less painful bailouts.
To manage a rogue illicit market in US dollars, the government relaxed regulations on the rupee, which led to the currency falling to historic lows.
Additionally, artificially low gasoline costs have increased.
“We’re at the end of the road. The government has to make the political case to the public for meeting these (IMF) demands,” former World Bank economist Abid Hasan told AFP.
“If they don’t, the country will certainly default, and we’ll end up like Sri Lanka, which will be even worse.”
Last year, Sri Lanka went into debt default and experienced months of food and fuel shortages that led to unrest and finally forced the nation’s government to depart the country and resign.
In Pakistan, time is of the essence, with Nasir Iqbal from the Pakistan Institute of Development Economics warning the economy had already “virtually collapsed” due to mismanagement and political turmoil, the news agency reported.
