PKR touching nadir, Pak economy in abyss

With very low exports and no financial packages from the US or China, Pakistan is drastically short on forex reserves. To meet the rising dollar demand, the country is now forced to sell its diplomatic possessions in the US.

New Delhi, Jan 28: Terror exporter Pakistan's economy is in doldrums and so is its currency. The massive fall in the Pakistani rupee (PKR) against the US dollar has further depleted its forex reserves. The country tried hard to get some bailout package from its ally China but that did not seem to have worked. Now, it has pinned its last hopes on the IMF and taken some measures to meet its conditions.

According to the forex experts, the fall in PKR is due to the government lifting up the exchange cap. This triggered the selling as several of the sellers were trapped in their position for quite some time. The 9.6 percent decline of the currency has been unprecedented. It is the second-biggest drop in a single session ever. The latest drop has gone below the previous official low of PKR 240 in July 2022.

With lower levels in exports and no financial packages from the US or China, Pakistan is drastically short on forex reserves. To meet the rising demand for the dollar, the country is even selling its diplomatic possessions in the US. There are hundreds of shipping containers with raw materials for industry and foodstuffs are stuck in Karachi port as the banks are not offering any guarantee for importers' dollar transactions.

Sad state of economy

Not just the shortage of wheat flour and fuel but the basic medicines are also not available for a large section of people in Pakistan. Just recently, the whole country was without power for several days as there is not enough electricity. The nation does not have enough resources to pay back the interests on the loans it has taken from several organizations and nations.

The reports claim that Prime Minister Shehbaz Sharif is reluctant to meet loan conditions amid falling popularity and political volatility and this is also a reason that no country has come forward to rescue Pakistan from the looming economic crisis. Moreover, to preserve whatever forex reserves it has, Pakistan has tried to reduce imports, even of the essentials.

Pakistan's Planning Minister Ahsan Iqbal went to the extent of saying that if Pakistan just complies with the International Monetary Fund (IMF) conditionalities, there will be riots on the streets. Therefore, the country needs a staggered programme so that the economy and society is able to absorb the shock or cost of a front-loaded programme.