news analysis
Pakistan is going through a period of extraordinary crisis as its managers struggle to save its debt-ridden economy amid heightened political uncertainty and terrorist threats. Opaque loans from its closest ally, China, are complicating bailout negotiations with the International Monetary Fund (IMF), while its citizens suffer hunger and rising unemployment.
“Pakistan is facing one of the worst economic crises in an era of political instability and troubled security,” said a research fellow at the Washington, D.C.-based Hudson Institute, who has been on the Aparna Pande, author of the book, told The Epoch Times.
The government held intensive talks with the IMF for 10 days from January 31 to February 9, but failed to reach an agreement. Talks resumed on 14 February, breaking dawna major national newspaper said, citing an insider, that the IMF “hopes to start working on agreed measures before Pakistan releases”. [the] the next tranche
Pande said the ongoing and continued drag on negotiations with the IMF was a sign of crisis. “This is her 23rd bailout of Pakistan by the IMF. The IMF is the lender of last resort as well as her ICU and in ICU she goes 23 times there is an underlying problem that needs to be resolved. I will,” she said.
Pakistan’s economy grew by only 2% in 2022, but its foreign exchange reserves now stand at $6 billion, not enough to cover exports for a month.
Its very low US dollar reserves forced it ban on import Suspend essential food and medicine until the IMF provides relief. Meanwhile, Pakistani industries such as steel, textiles and pharmaceuticals are largely dysfunctional and many have closed. Experts fear an unprecedented increase in poverty and unemployment.
“Pakistan is on the brink of economic collapse and is simultaneously facing one of the worst surges in Islamist terrorism. A record number of young professionals are leaving the country. It’s a terrible time for the 220 million Pakistanis,” Adnan Aamir, a journalist working in Pakistan, told the Epoch Times in an email.
Exacerbating the crisis are natural disasters that have wreaked havoc. Massive floods in 2022 killed 1,700 people, devastated agriculture and livestock, and destroyed more than 1 million homes, 24,000 schools and 1,500 sanitation facilities in 72 districts of the country . 15 million people needed flood assistance, and 9 million people were pushed into financial poverty by the floods, according to the UNICEF. UNICEF.
The textile industry, which contributes more than 60% of Pakistan’s total export value, was severely damaged by the floods, losing almost 40% of total cotton production and reducing overall agricultural production by 10-15%. Decreased. business recorderPakistan’s leading media conglomerate.
Aamir wrote in a recent article in Nikkei Asia that the overall crisis has accelerated a “brain drain” from the country. According to the latest government figures, in 2022 he will have 832,339 Pakistanis working abroad, making him the third highest figure ever.
years of bad policy
Critics have blamed policymakers for Pakistan’s economic ordeal, accusing certain prominent politicians of instigating the crisis for the vote.
Ahmed Qureshi, a veteran Pakistani journalist, feels the current situation reflects years of bad economic policies. He believes the country’s leaders failed to capitalize on its strengths and instead adopted a model of living “permanently” on international loans.
Qureshi attributes the current standoff with the IMF to the government of former Pakistani Prime Minister Imran Khan, who lost his government in a no-confidence vote in parliament last April.
“Recent troubles with international financial institutions stemmed from former Prime Minister Imran Khan’s ill-advised move to end the IMF’s commitment to austerity, thereby undermining Pakistan’s position in future negotiations. It’s being done,” said Qureshi.
Amir said reforms were largely non-existent in Pakistan’s “intrinsically flawed” economy. The world’s allies no longer trusted the country for new loans because they had seen no reforms or economic improvements after previous loans.
“The IMF is therefore the last option for Pakistan,” said Aamir. “The August 2022 bailout was just one tranche, just like the current one. Only for the next six months and this situation will not change unless there is a fundamental change in the way Pakistan is governed.”
stir up a crisis
Adding to the economic woes is political instability, which critics claim Khan is exploiting for political gain. It controls two states in the state, and the elected legislatures of both states were dissolved in January.
The dissolution was believed to have been driven by Khan, who had called for early elections in the country since he was ousted from power last year.
“Imran Khan used the dissolution of parliament as a political card to force early elections in the country,” Aamir said.
Pakistan’s Electoral Commission said two election polls Held in April. Khan told foreign journalists on Wednesday that his party will continue to push for early elections and that his party members will take to the streets.
“Pakistan will go bankrupt. [current] The government has failed to hold early elections,” said Khan, who blamed the current economic crisis on his removal from power. “Only that would guarantee political stability.”
Qureshi said Khan is power hungry and his protests are known to be a campaign to appease Pakistani voters.
Chinese loans raise concerns
Pakistani sources do not attribute the current crisis to China, Pakistan’s biggest creditor. But critics say the lengthy negotiations with the IMF are due to China’s less transparent lending deals.
“China has always liked to be opaque about its loans to any country, including the Belt and Road.Explaining Pakistan’s Foreign Policy: Fleeing India.“
Pande said the IMF and other financial institutions want to know the details of China’s loans to Pakistan before offering additional bailout loans.
On February 16, US foreign policy adviser Derek Cholet, who led a delegation to Pakistan last week, shared concerns about the country’s debt to China.
“We have expressed our concerns not only here in Pakistan, but elsewhere in the world about China’s debt, or debt owed to China.” told reporters.
last year, bloomberg reported that Pakistan owes 30% of its external debt to China. Citing an IMF report, Bloomberg said it more than tripled what the country owed to the IMF and more than the combined funding of the World Bank and Asian Development Bank. Much of this debt is under the China-Pakistan Economic Corridor Project (CPEC), a major Belt and Road Initiative (BRI) project.
Rebates and Fraudulent Transactions
Pande said China’s reluctance to share detailed information about its loans to Pakistan meant that these loans included “kickbacks to local elites, corrupt deals, and certain It is likely that it means that the condition of
According to news reports diplomat, a government commission set up in 2019 found discrepancies worth US$625 million (PKR 100 billion) in the independent power generation sector. At least a third of them are related to projects in China. The report also pointed to links between Pakistani military installations and China.
Aamir said the Pakistani government has a favorable view of China, but is aware that the Pakistani government has fallen into a Chinese debt trap.
“But they still need Chinese money and diplomatic support from the United Nations and other institutions. “You can’t separate it,” he said.
Bet on the Pakistan Army
Madhav Naraphat, director of geopolitics at India’s Manipal University, told the Epoch Times that China has fostered ties with Pakistan’s powerful military.
“China has made a big bet on the Pakistani military. China has not supported the Pakistani people or the Pakistani state. In the current situation, more and more security mechanisms are being set up inside Pakistan to protect China’s investment in CPEC, he added.
“Ultimately, my view is that if they want to protect their investment, there will be more and more Chinese soldiers and security personnel. there is,” he said.
The Epoch Times was unable to independently verify Naraphat’s claim that there are Chinese troops in civilian clothes inside Pakistan.
But Aamir said, “The Chinese asked permission to bring their security. [the] The Pakistani government denied it. “
In late 2021, Indian media reported that Chinese troops were stationed on the disputed India-Pakistan border.report in economic times He said People’s Liberation Army (PLA) units were investigating villages and military camps.
August 2021, China’s state-run People’s Daily Online report The Pakistan Army celebrated PLA Day “warmly”, calling the PLA and the Pakistan Army “brothers in arms”.
rise of terrorism
The Taliban’s return to power in Afghanistan in 2021 has adversely affected Pakistan’s national security. The Pakistani rebel group, the Pakistani Taliban (TTP), also known as the Pakistani Taliban, launched a new offensive during the financial crisis.
up to date happened on February 17th At the Karachi Police Inspector General’s Office. Seven people were killed, including three militants, and 18 were wounded.another explosion On the train on February 16th Two people died and several were injured. But the deadliest attack occurred during a prayer service at a mosque in Peshawar on January 30, when 103 people were killed and 200 injured.
January was the worst. month Terrorism within 5 years.
In the past three months, the Pakistani Taliban and their members have carried out 160 attacks, killing hundreds, it said. Recent reports It is by the International Forum for Rights and Security, a Toronto-based think tank.
Narapat said young elements of the Taliban had “turned their backs” on Pakistan.
China should take responsibility
Narapat has suggested that China should step forward to help Pakistan resolve the crisis. China, he said, was responsible for backing the Pakistani military, for the breakdown of Pakistani relations with the United States, and for a complete stalemate with India.
“China should write off all debt owed by Pakistan and limit $100 billion to civilian use. We need UN oversight to make sure it is the only [used for] For civilian purposes,” Narapat said.