Pakistan’s reported request for a hefty $10 billion loan from the US is no more than another half-baked step to revive the economy. At best, another large loan will keep the country financially afloat and visibly solvent.
Yet, the reality is far more challenging than a mere gap in Pakistan’s foreign reserves. The injection of new foreign loans will simply not revive Pakistan’s economy as the country navigates one crisis after another.
While Pakistan’s ruling structure claims success in securing a recovery with an IMF-led bailout, a number of challenges continue to hamper prospects for the future. In recent months, Pakistan’s outlook has been overshadowed by the fallout from the US-Israeli war on Iran. Pakistan’s prospects have suffered not only because the country is an oil importer hit hard by rising oil prices.
Pakistan’s geographic location right next to Iran also raises questions over the country suffering from war-related fallout, notably with an all-out future flare-up that drives large numbers of refugees to the country. More distressing for Pakistan will be a scenario in which the country is forced to take sides amid an escalation of this conflict, departing from Pakistan’s preferred role as a neutral mediator.
Such an unwelcome development in future will heap further stress upon Pakistan, which is already suffering badly from three inter-related challenges.
First, more than two years after the Prime Minister Shehbaz Sharif-led ruling structure took charge in February 2024, there has been a failure to bring relief to the people at the grassroots level. This has in turn further reinforced the loss of popular confidence in the ruling structure. In sharp contrast to the ‘sub achha hai’ (all is well) mantra frequently heard from the power corridors of Islamabad and the province of Punjab ruled by the prime minister’s party, conditions on the ground present a dismal picture.
For a long time, the process of development across Pakistan has been driven by an ultra-heavy focus on infrastructure projects, notably a network of ever-growing motorways. In the latest such instance, much has been publicised over a new motorway planned to link the city of Kharian to the cities of Rawalpindi and Islamabad, thus creating another route to Lahore. In reality, such choices must be set aside in favour of other causes that ultimately help tackle the large-scale incidence of poverty across Pakistan.
Even a conservative figure of a quarter of Pakistan’s population or more than 63 million Pakistanis living below the poverty line must only serve to give sleepless nights to Pakistan’s decision-makers. Indeed, there are many respected and independent experts within and outside the country who claim a higher proportion of the population -- a third or more -- living in extreme poverty. If true, this is a further reminder of the catastrophe within, remaining much larger than officially recognised.
Second, as Pakistan remains engulfed in an increasingly severe climate crisis, the ruling structure appears to be at least half disconnected from this major emergency facing the country. In the past month, reportedly at least 100 people have died across Pakistan in weather-related incidents. What appears on the horizon is proverbially just the tip of the iceberg. Below this emerging disaster lies a future which is certain to become increasingly grim, unless faced with a series of reforms focused on Pakistan’s rural areas.
Just in the past week, reports of Pakistan seeking to import one million tonnes of wheat in the coming days were an eye-opener. This followed an unexpected rise in wheat prices across Pakistan, a glaring sign that the last wheat crop’s yield was falling short of the government’s target. In a country where more than 85 per cent of the population consumes wheat, the persistent gap in wheat production highlights a broader failure.
In recent years, the Punjab provincial government’s failure in 2024 to purchase wheat stocks at the price officially promised earlier led to large-scale losses for the farming community. Anecdotal evidence suggests that many farmers are still reeling from those losses. Additionally, others cut their inputs for wheat production, notably chemical fertilisers and the purchase of new seeds, amid widespread fear that the 2024 saga is set to repeat itself. Meanwhile, Pakistan’s rapidly depleting forest cover needs to be halted and reversed through bold interventions in rural areas.
And last but not least, the course correction in Pakistan’s development spending can still be devoted to concrete-related work if required, but with a distinct difference. Rather than further expenditure on motorways or other infrastructure projects, such as the repeatedly publicised fast trains, a more timely use of the same concrete towards building new dams in an increasingly water-deficient country will serve a more urgent need.
As the nation faces a grave emergency, resetting the national priorities urgently must become a vital goal to be pursued immediately.
The writer is an Islamabad-based journalist who writes on political and economic affairs. He can be reached at: [email protected]
