Pakistan, a nation with a rich cultural heritage and a diverse population, has been facing severe economic challenges over the past few years. Despite its potential and abundant resources, the country’s economy has struggled to grow, hindered by a multitude of internal and external factors. This article examines the reasons behind Pakistan’s economic predicament, the implications of its dependence on the International Monetary Fund (IMF), and the steps that need to be taken to steer the country toward a path of sustainable growth and stability.

One of the most glaring indicators of Pakistan’s economic distress is the contraction of its economy. Over the past two years, the total size of Pakistan’s economy has shrunk to $341 billion. In stark contrast, neighboring Bangladesh’s economy has grown to $460 billion, and India’s has reached an impressive $3,400 billion. This stark disparity highlights the extent of Pakistan’s economic challenges. The shrinking economy has had a cascading effect on employment and poverty levels. With fewer job opportunities available, approximately 100 million people are now living below the poverty line.

Industrialists lament the stifling business environment, citing expensive electricity and high interest rates as major impediments to their operations.

When a country seeks assistance from the IMF, it often signifies a loss of economic self-sufficiency. The IMF, as a lending institution, imposes strict terms to ensure the repayment of its loans. These terms typically include economic reforms and strict fiscal discipline, which, while beneficial in the long term, can be harsh on the populace in the short term. Pakistan has had to turn to the IMF repeatedly, leading to a vicious cycle of debt and economic hardship. The government’s reliance on loans has ballooned the national debt to over 64 trillion rupees. Each new loan brings with it stringent conditions that often necessitate unpopular measures like raising the prices of essential utilities such as electricity, petrol, and gas. In recent days, there has been a significant increase in the prices of gas and electricity, further burdening the already struggling population.

The economic forecast for Pakistan is grim. According to the World Bank, the inflation rate is expected to hit 26% in the current fiscal year. Moreover, the country’s growth rate is projected to be less than 3% over the next three years, with an expected growth rate of just 1.8% for the current financial year. This dismal economic performance is largely attributed to the acceptance of the IMF’s demands, which have increased inflation and stifled growth. The country is currently in a state of chaos and anarchy, which is having very negative effects on the economy. The poor are going through an extremely critical period, struggling to make ends meet as their incomes remain stagnant while expenses have soared. The worst storm of inflation has hit them hard, with prices of basic commodities like flour, rice, sugar, ghee, and oil increasing several hundred times.

The prices of essential utilities have also reached their highest levels in history, making it difficult for people to provide their children with a decent education and basic necessities.

Political instability has further exacerbated Pakistan’s economic woes. Frequent changes in leadership, corruption scandals, and a lack of long-term policy continuity have severely undermined economic planning and investor confidence. Inconsistent economic policies across different administrations have created an environment of uncertainty that is detrimental to business and investment. Inadequate infrastructure, including roads, ports, and energy supply, has hampered industrial growth and export capacity. Additionally, widespread tax evasion and a large informal economy have limited government revenues, further straining the country’s financial resources.

The economic turmoil has disproportionately affected the poor and salaried classes. The federal budget for 2024-2025, which was expected to distribute the economic burden more equitably, has instead placed the brunt of it on the common people. Additional taxes totaling 30 trillion rupees have been imposed, leading to a budget deficit of 8,500 billion rupees. Government expenditures remain exorbitant, with millions spent on official vehicles, petrol, repairs, and free utilities for government officials. This lavish spending stands in stark contrast to the everyday struggles of ordinary Pakistanis, many of whom cannot afford basic necessities.

To navigate its way out of this economic quagmire, Pakistan needs a multifaceted approach. The government must commit to long-term economic reforms that prioritize sustainable growth and development. Reducing corruption, improving infrastructure, and broadening the tax base are essential steps. Additionally, the economic burden should be distributed more fairly, ensuring that the elite also contribute their fair share.

The ruling class and elite need to bear the burden alongside the common people, breaking the cycle of imposing all economic hardships on the poorer sections of society.

Ultimately, Pakistan must strive to regain its economic sovereignty and reduce its dependency on external loans. This requires not only sound economic policies but also political stability and the rule of law. Respecting the decisions made by the people through their votes is crucial to building a more equitable and prosperous nation. Long-term policy continuity, political stability, and an environment conducive to investment and business growth are imperative for sustainable economic development.

Pakistan’s economic situation is dire, but with the right measures and a collective will, there is hope for recovery and growth. The journey will be challenging, but it is one that the nation must undertake for the sake of its future. By addressing the root causes of its economic problems and implementing comprehensive reforms, Pakistan can pave the way for a more stable and prosperous economy. The resilience and potential of its people, coupled with effective governance and strategic planning, can ultimately lead to a brighter economic future for Pakistan.