THE new sunday express Voices Anand Neelakantan Shinie Antony Ravi Shankar Shampa Dhar-Kamath Devapriya Roy Mata Amritanandamayi MAGAZINE Buffet People Wellness Books Food Art & Culture Entertainment JUly 3 2022 SUNDAY PAGES 12 ECONOMIC CRISIS Pakistan stares at bankruptcy despite ongoing negotiations between Islamabad and IMF to resume the latter’s $6 billion bailout package. The free-falling Pakistani Rupee—which has become Asia’s “worst-performing currency in 2022” with a drop of nearly 16.5 percent (since December 31, 2001) against the US dollar—crossed 212 per dollar on June 21. The foreign exchange reserves have depleted to below $9 billion and the country has less than six weeks of import cover remaining, according to media reports. The IMF has set tough preconditions like hiking electricity tariffs and imposing a levy on petroleum products to revive the stalled $6 billion bailout package to Pakistan. Pakistan In Free Fall Pakistan stares at ruin with a begging bowl in hand. With its economy in shambles, the looming Afghan Taliban terror threat, bitter internal political rivalries and the IMF twisting its arm, an unstable neighbour is India’s biggest headache. P By Chandan Nandy akistanis love their tea—in all flavours. Common Pakistanis also relish the manner in which they sip their tea: they usually pour half a cup into a saucer before slurping the sugary-syrupy liquid. This could go on endlessly through the day on any Pakistani street. So, when Pakistan’s Planning and Development Minister Ahsan Iqbal “appealed” to his countrymen a couple of weeks ago to cut down on chai and restrict themselves to just two cups a day—in the name of “austeritea”—there, obviously, was a backlash; on the streets and on social media. The ministerial suggestion became a butt of jokes, ribald and otherwise. The brew is not the only storm in the Pakistani cup. The country is besieged with a host of other complex issues—from a sinking economy including , a battered currency a , precarious balance of payment situation; opaque national security vis-a-vis a resurgent Tehrik-e-Taliban Pakistan backed by the Afghan Taliban and a seemingly problematic Balochistan; a rudderless policy on Kashmir; a listless foreign policy insofar as America is concerned; to Pakistan’s traditionally bitter internal political rivalry Prime Minister . Shehbaz Sharif has taken a calculated gamble in imposing a ‘super tax’ on the rich. This is a doubleedged sword. Much as it may bring in revenue for the cash-strapped government, the measure can turn the wealthy against the ruling coalition at a time when both sides in the National Assembly are preparing for the elections due in August 2023, unless advanced this year. Meanwhile, Iqbal’s appeal came in the backdrop of a mounting economic crisis. Pakistan has weathered many economic storms but this one appears to have flattened all past recovery curves. On the brink of bankruptcy the country has , not just singled out the humble tea, of which Pakistan is the largest importer in the world—the country imported tea worth Rs 13 billion or $60 million in FY 2021-22—but has flirted with the possibility of cutting down on working days to save on fuel. This alone would help save an estimated $2.7 billion in precious foreign exchange. “Our broth is a mix of structural, political and geopolitical elements in which governance incompetence coupled with global inflationary tendencies have combined to produce the mess we are in now,” Zafar Habib, an Assistant Professor at the Peshawarbased Institute of Management Sciences, told this correspondent over the phone. Earlier this month, Pakistan’s coalition government led by PM Sharif decided to restrict wedding functions in Islamabad beyond 10 pm in an effort to cut down on power consumption in an already chaotic situation where load-shedding is the norm rather than the exception. Early this week, when Pakistan failed to secure a deal for natural gas supply for July Sharif , warned his countrymen of increased power outages in the coming weeks. Govern- ment notifications instructed people to opt for frugal wedding receptions where only one dish be served to guests. The woes deepened when the Sharif government hiked fuel prices for the third time in the last 30 days or so as part of the International Monetary Fund’s (IMF) conditionalities to revive a bailout package. Petrol prices were recently raised by 56 percent or Rs 84. As a result, the current price of petrol is Rs 233 per litre. The price of speed diesel went up by 83 percent since May with its current price now standing at Rs 263 to a litre. Notwithstanding an IMF bailout package—Pakistan and IMF indicated recently that talks will resume with the former requesting that it be enlarged from $6 billion to $8 billion—Sharif presented a tax-heavy budget for 2022-23. Islamabad has structured its budget to meet the IMF’s bailout objectives and this involves a huge increase in fuel prices, removing subsidies on energy and additional sales tax on petroleum products. These measures, demanded by the IMF, were to come into force from July 1. Also, the government has agreed to raise taxes, both direct and indirect, considerably Large . industries such as cement, oil, sugar, steel, textiles, automobiles, fertiliser, aviation, chemicals and NATIONAL SECURITY The Afghan Taliban has defied the status of the Afghan-Pakistan border and provided a haven to the anti-Pakistan insurgent group, the Tehrik-e-Taliban Pakistan, which has killed thousands of Pakistanis and seeks to establish a Taliban-style, Shariah-compliant state in Pakistan. beverage, among others, will now have to pay a 10 percent ‘super tax’. Pakistan’s natural allies—China, Saudi Arabia and the UAE—have already advanced loans and pledged to stand by the country But . Islamabad’s traditional allies, which backed the country during a similar, if less intense, crisis in 2018 Turn to page 2 prime minister shehbaz sharif’s ‘super tax’ on the rich is a double-edged sword. Much as it may bring in revenue for the cash-strapped government, the measure can turn the wealthy against the ruling coalition.
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