The economic crisis has been the greatest debacle of Prime Minister Imran Khan’s government which has resulted in his undoing. The government struggled to control inflation which was the result of the record high global commodity prices and the coronavirus pandemic.
The inflation rate in March was recorded 12.7% due to the surge in food and energy prices. This is thrice the rate recorded in June 2018 before the government took control. The Pakistani currency has faced 51% devaluation and the mismanagement by both federal and provincial government is unravelling.
During his tenure, the prime minister struggled to bring the economy under control. He held dozen of meetings to contain inflation, change his economic team and the finance minister multiple times, and provided relief subsidies on several occasions. But all efforts remained fruitless and the economy is in a deeper crisis than ever before.
The Asian Development Bank (ABD) has said the growth rate will slow down to 4% in the current year and inflation will in remain in double digits. The economic growth rate is lower than the 4.8% forecast by the government. Meanwhile the IMF has suspended the next tranche of the bailout package amid the political crisis which will only be released once the new government is formed.
The State Bank of Pakistan has jacked up the interest rate to a two-year high at 12.25%. The Pakistani currency reached a historic high of Rs189 before the central bank intervened. The trade deficit has peaked to a record $35.4 billion in the fiscal year as exports fell and imports surged – a trend the government couldn’t reverse in its entire tenure.
The growing deficit is taking a heavy toll on the foreign exchange reserves that are on a steep slide and increasing debt payments. The foreign currency reserves are constantly on the decline and dipped further to $12 billion on March 25 – barely enough to cover two months of imports.
The economic legacy that the prime minister is leaving behind will leave a mark on his performance and impact his chances in the next elections and years to come.
