Covid19 has hit every country in the world with developing countries, like Pakistan, amongst the hardest hit. Pakistan’s economic woes predate Covid19 but the country is likely to be the worst hit in South Asia, as its leaders – both civilian and military – refuse to undertake structural reforms. Instead, as always, the country’s leaders are seeking debt forgiveness.
On April 13, Prime Minister Imran Khan appealed “to world leaders, to UN secretary general (Antonio Guterres) and to heads of the financial institutions, to launch an initiative, an initiative that will give debt relief to developing countries to combat the coronavirus.” Pakistan’s total debt and liabilities stand at about Rs41 trillion, which is almost 94pc of the country’s GDP. The external debt situation is particularly problematic.
As a Dawn story notes, “With its economy already struggling, Pakistan is likely to be hardest hit as it struggles to simultaneously save lives and livelihoods. Along with Afghanistan and Sri Lanka, Pakistan is in danger of experiencing a negative economic growth rate. With the population growing at 1.8pc a year, the prospects are dismal. The population explosion that has never been on the radars of our policymakers has also been a major reason for our deteriorating health situation. The current crisis has exposed all these fault lines.”
Further, “Another serious problem adding to the country’s woes are the shrinking job opportunities in the oil-producing Arab and Gulf countries that are the biggest source of employment for Pakistani expatriate workers. This will not only add to the rising unemployment problem but will also affect remittances. The development will have serious social and economic implications.”
While the IMF has announced debt relief for 25 countries, including Afghanistan, it has only offered Pakistan a loan, not debt relief. IMF is considering a $1.4 billion loan requested by Pakistan.
It is ironic that Imran Khan and PTI who made fun of PMLN and Nawaz Sharif’s Kashkol program or PPP’s asking for a Marshal Plan have now gone back to the same policy: ask for debt forgiveness from the international community!