Pakistan’s economic woes put Prime Minister Khan’s future in jeopardy
Housewife Maira Tayyab has considered begging for money to support her family in inflation-stricken Pakistan, while shopkeeper Mohammad Hanif finds his thoughts turning to crime.
They are too proud and honest to act spontaneously, but their plight is shared by millions of Pakistanis whose discontent is threatening Prime Minister Imran Khan’s chances of re-election next year.
“We cannot beg because we are employees,” Tayyab, 40, told AFP in Karachi, a busy port city that is Pakistan’s financial capital. “We don’t know how to make ends meet.”
According to the World Bank, inflation reached around 10 percent last year. The price of cooking oil has risen 130 percent since Khan took power and fuel costs have risen 45 percent to 145 rupees (82 US cents) per liter per year.
Tayyab’s sentiments are shared by Kursheed Sharif, a 50-year-old mother of five, who lets loose a slew of curses as she describes her family’s woes.
“Only death seems to be an alternative to surviving under this government,” she told the AFP news agency on the verge of tears in front of her unplastered tenement.
The government boasts of its economic achievements, but in reality it has lost ground and credibility
When his Pakistan Tehreek-e-Insaf (PTI) party came to power in 2018, Khan vowed to eradicate decades of entrenched corruption and nepotism.
But its failure is already being felt in elections, and last month the PTI was crushed in provincial elections in its stronghold of Khyber Pakhtunkhwa.
“The government boasts of its economic achievements, but in reality it has lost ground and credibility,” said Tauseef Ahmed Khan, a human rights activist and political commentator.
Khan had advocated the creation of an Islamic welfare state, with efficient taxation of corporations and individuals who finance social projects benefiting the poor.
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Analysts admit he inherited chaos – and the Covid-19 pandemic hasn’t helped – but his policies have done little to change the state of affairs.
“Nothing is stable,” said Rashid Alam, who works for an international bank in Karachi. “Increased unemployment, increased inflation…this is the political and economic reality in Pakistan.”
The numbers confirm it. Although the economy is expected to grow by 4 percent in 2022, it has largely stagnated over the past three years.
The rupee has also suffered badly, falling 12 percent against the dollar since July — unhelped by a $5 billion trade deficit and despite foreign remittances from a vast diaspora growing nearly 10 percent to $12.9 billion .
Khan argued this week that Pakistan’s problems – inflation in particular – are not unique, saying it remains “one of the cheapest countries” in the world.
There are some pluses. Manufacturing and services sectors are rebounding as lockdowns ease, the World Bank said, and better rains this year will boost agriculture. But the biggest problem facing the economy is nearly $127 billion in debt service.
Khan successfully negotiated a $6 billion International Monetary Fund (IMF) loan package in 2019, but only a third was paid before the tap was turned off after the government failed to implement promised reforms, including cutting subsidies for a number of basic things.
Pakistan has endured painful conditions such as rising gasoline and electricity prices.
Any loans she has now taken out, from whatever source, are intended to repay past loans. Basically, the economy is bankrupt. Pakistan cannot pay its loans
Ahead of an IMF meeting later this month to decide whether to release another tranche, the government pushed through a mini-budget – with new or increased taxes on a range of imports, exports and services – that would has drawn the wrath of millions.
“Can you imagine oil and sugar prices reaching that level?” complained housewife Sharif.
On the brink of default, Islamabad recently siphoned $3 billion each from China and Saudi Arabia and $2 billion from the United Arab Emirates.
“Any borrowings it has now taken, from whatever source, are intended to repay past borrowings,” said Qaiser Bengali, an independent economist. “Essentially, the economy is bankrupt. Pakistan cannot pay its loans.”
Still, no one seems willing to pay for the services they want. Tax evasion is almost a national sport — fewer than two million people paid in 2020, out of a working population 25 times that size — and revenues account for less than 10 percent of gross domestic product, the lowest in the region.
Such harassment prompts Muhammad Hanif, who runs a small car battery repair shop, to think of new ways to support his family.
“[Criminal] I have thoughts about how I need to reach my goal,” he said. “But I fear Allah, so I shake off those thoughts.”
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