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Wednesday, December 6, 2023
WorldAsiaPakistan at the brink of Financial agony

Pakistan at the brink of Financial agony

Since the outset of Imran khan’s tenure, Pakistan’s economy has been confronting a sprint slump.  Recently The government presented its Budget, which unfolded the Economic Survey of 2018-19, showcasing that the country’s GDP has grown at only 3.3% cent in the fiscal year 2018-19. This is a nine-year low.

Sky-high rate of Inflation, increased unemployment, and current account deficit are the key drivers causing Pakistani rupee to topple over almost 20% since 2017 against the dollar, the gap is expected to be further widened.

Pakistan is known as a huge sponsor of insurgent groups thought to be spending 95% of its annual budget on defense measures, well, it is still uncertain whether the allotted budget goes all in all to the defense or militants’ bailout?

In a recently held press conference, the Governor of Pakistan’s central bank expressed that Pakistan is coming out of the financial crisis with the assistance of its allies and the economy has been fixed in the right direction. He further added that a plan had been framed to chase off the current account deficit. His comments came just a day after Pakistan and Saudi Arabia signed an agreement worth $20 billion.

On the other hand, the statistical data narrates a different story, as per data published by the Asian Development Bank, Pakistan’s GDP growth in the current fiscal year so far stays at 4.8%, lower than even Nepal (5.5%). In comparison, Bangladesh is growing at 7.5% and India’s GDP is at 7.6%. besides, Pakistan’s latest GDP figures show that it has stooped from 5.4% in 2017 and 5.8% in the following year. The GDP growth rate is anticipated to fall to 4% this year (2019) and then will remain at 3.5% for the next two years and fall further to 3.3% by 2022.

Being currently present on the Financial Action Taskforce (FATF) ’grey list’ Pakistan is up for a final review of its status at the FATF plenary meeting in Paris Next month. The main objective of the FATF is to outline standards and promote effective implementation of regulatory, legitimate, and operational measures for combating money laundering, terrorist financing and other relevant threats to the integrity of the International Financial System.

According to sources showing that Pakistan’s implementation of FATF action plan located only five out of 100+ UN-designated terrorists currently said to be present within the country. The five terrorist groups also include (1) Lashkar-e-Taiba (2) Jamaat-ud-Dawah (3) Falah-i-Insaniyat mastermind being Hafiz Saeed. given the fact that the country is involved in mass money laundering and providing a bailout to the terrorist groups it has been anticipated that the country will soon be blacklisted by FATF it the same continues further.

Sprint in inflation rate is another menacing issue for the country’s economic downfall, countrywide fuel prices increased to Rs98.89 ($0.70) per liter, with diesel prices at Rs117.43 ($0.83), some economists say that the government of Pakistan could curtail this problem by increasing the tax rates, but if the tax rates are increased Rupee will lose its value which will affect the country’s trade.

To avoid further deficiency, the country must put out proving funds to the militant groups, second enhance a trustworthy relationship with the neighbors, as Afghanistan and India play a key role in reviving Pakistan’s economy, third providing job opportunities to the people by using the country’s internal resources.

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Hamayun Khan
Hamayun Khan
Afghanistan-based Researcher writes on Business, Finance, and Social Issues of Afghanistan and the region. Contributor to The Eastern Herald. Hamayun can be accessed via [email protected]

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