Pakistan’s economic woes

Pakistan’s debt has reached 88 percent of GDP, from March to June 2022, there was a loss of 500 billion rupees to the national treasury. The previous government endangered the country’s economy by announcing an amnesty scheme in reducing prices of petrol, and energy manufacturing products and lowering taxes. Later on, the current government increased the prices of electricity and petroleum products at the terms of International Monetary Fund (IMF). Besides, the previous regimes in Pakistan while neglecting the agriculture sector, are now importing agricultural commodities worth $9 billion which the country used to export earlier.
Amidst the economic crisis, recent floods in Pakistan, and particularly in Balochistan, have worsened the economic scenario further. In every city and region, unsophisticated and illegal constructions on water pathways are established. The main question is who will take care of the waterways where people have not been taken care of? According to the Pakistan Meteorological Department (PMD), till the last week of July 2022, there has been 192 percent more rain than the average in Pakistan. The average rainfall in Pakistan in July is 51.5 mm, but this year it has been 150 mm. According to PMD in July 2022, there was 132.4 mm of rainfall in Balochistan`s which is 443 percent more in comparison to last decade that was 24 mm approximately. This enormous rise in precipitation triggered rain induced floods in the province, pushing people lives and their mud houses into peril.
Among the detrimental effects of the floods are the loss of life, damage to infrastructure like dams, roads, bridges, agricultural products, livestock, irrigation systems, and flood control structures. Floods will worsen price hikes and cause shortage of edible domestic products in the affected areas and there are different restraints in demand and supply of various basic items due to barriers in road pathways. Significantly, access to clean potable water is the main hurdle in flood hit areas and unavailability of clean water has the potential to aggravate further diseases like diarrhea, vomiting and body immune system.
The availability of clean drinking water due to high demand and low supply will deteriorate if there are significant and protracted floods. Floods have damaged rice weighing approximately 2.6 million tons, sugarcane weighing 7.4 million tons, cotton weighing 0.8 million tons, and maize weighing 0.4 million tons and many more losses have not yet been reported. Pakistan’s imports, trade deficit and political crisis are causing a continuous increase in the value of the dollar and declining the value of rupee. As the price of petroleum increased, so did the price of fertilizer. Thus, the expenditure required for cultivation of the rice crop has increased two to three times.
According to National Disaster Management Authority (NDMA), 3248 houses have been completely destroyed while 5131 have been partially damaged, 615 km of roads and 49 small and big bridges across the country have been mutilated by floods. The highest number of complete houses were destroyed in Balochistan with a total of 2536 while 1417 were partially damaged.
Pakistan is generating expensive electricity from $14 billion worth of furnace oil, while country`s external debt has reached $129 billion ignoring cheaper sources of alternative energy. In this time, floods have further worsened the situation, which have washed away multiple electric poles, electric cables, gas pipelines and other energy infrastructure, which ultimately adds burden on the national economy in the shape of spending on restoring the damaged infrastructure. The foreign exchange reserves of merely $8 billion have been left for only one month of imports and Pakistan will face further acute inflation.
Therefore, federal and provincial governments need to assist the flood affected areas as a top priority to save the national economy from declining further. The concerned authorities have to clear the rain pathways and provide alternative road pathways to ensure access to basic commodities, food items and clean water to avoid any further disruption in the demand and supply chain.

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