Finance Minister Ishaq Dar’s repeated vows of Pakistan not defaulting ring hollow as the International Monetary Fund (IMF) has yet to show any sign it will revive a stalled $6.5 billion bailout unless Islamabad can arrange $6 billion in financial support from “friendly” nations. As Dar has made clear, the IMF is not treating Pakistan “normally,” shifting goalposts whenever it appears the country has fulfilled all prior conditions to end the impasse. This leaves Pakistan in a perpetually precarious state, with last year’s provisional growth rate of 0.29% feeling especially dire against the 3.36% annual population growth rate estimated by the 2023 census. At the same time, inflation has reached record-high levels, the rupee is facing further devaluation and foreign exchange reserves are barely sufficient for a month of imports.
The economic crunch can be directly linked to political instability and Pakistan’s on-again-off-again democratic process. The past year has seen polarization reach a fever pitch, with Pakistan Tehreek-e-Insaf (PTI) chief Imran Khan cashing in on the public anger over loss of purchasing power, even as the incumbent government blames his tenure in power for the worst of the crisis. Despite the worsening macroeconomic indicators, however, the finance minister—a relative of the Sharif family—maintains he has the formula for economic recovery even as economists foretell doom, especially with some estimates of $35 billion in debt servicing requirements during FY2023-24.
The biggest victim of the prevailing crises is the average Pakistani, who has little recourse but to hope conditions will improve—regardless of who is in power. Earlier this year, Dar sought to prove his “economic credentials” by challenging Khan to a live debate on the economy. One can’t imagine how such a debate might play out, as neither of the two appears to have anything to offer apart from blaming the other for all that ails Pakistan. The fears of default, meanwhile, show no signs of receding. The next year, unfortunately, is shaping up to be just as tough on Pakistanis as the one prior—and there is no end to the suffering in sight.