Khan’s Promises Notwithstanding, Pakistan’s Economy Continues to Slide


Two and a half years after coming to power and promising a Naya Pakistan in which the country would not have to beg or borrow money, there would be jobs for all, and economic growth would rival others — the exact opposite has happened. Pakistan’s economy has suffered its worst economic downturn, we are more indebted to countries than before and even to IMF, the rupee is on a downward slide, and there has been a steady slide in FDI.

The Pakistani rupee’s “value in the interbank market fell by Rs1.52 on Wednesday, closing the session at Rs159.83 against the US dollar, exchange rate figures released by the State Bank of Pakistan showed.  In the open market, one dollar was sold at Rs160.20 compared to Rs158.25 the previous day, according to data released by the Exchange Companies Association of Pakistan. “The recent news of International Monetary Fund (IMF) officials visiting Pakistan soon and resumption of talks with the agency led to panic buying by importers and hedging their imports.” The PKR has “depreciated against the dollar in the interbank market. The rupee has cumulatively lost Rs1.67 against the dollar since hitting a nine-month high of Rs158.16 on November 13, ending its longest winning streak since the SBP made data available.”

Further as per data released by the State Bank of Pakistan, “net foreign investment flows into the country shrank by 14.5pc to $587.5m in the first four months of the ongoing fiscal from a year ago. That is not all. A major chunk of the direct investment flows made its way from China to coal and other power projects being constructed as part of the CPEC initiative following the resumption of work on schemes during the period when a decline in Covid-19 infections was being witnessed. Besides CPEC projects, telecommunication, financial services and oil and gas were the other major recipients of FDI during these months, according to recent data published by the State Bank of Pakistan.”

According to a Dawn editorial “Facing a chronic balance-of-payments problem with negative Net International Reserves, Pakistan needs to urgently woo non-debt-creating foreign investment, especially in export-oriented industries, to increase its overseas shipments and replace foreign debt to pay its import bill. With global FDI flows plummeting in the wake of the Covid-19 health crisis, the government must invest heavily in modern industrial and agricultural infrastructure for that to happen.”