It is distressing to see a country with dedicated early leaders, such as Mohammad Ali Jinnah and Liaquat Ali Khan, approach the point of bankruptcy. It is awful to see, as a part of this country, to see it getting into the hands of corrupt people. The people we choose as our leaders must be deserving and determined to work in favor of the country. They must have a sense of attachment to the country and the capability to deal with any unrest rising in the country, whether economic, political, or moral.
Pakistan once had stable economic growth averaging 5.82 percent per year for 11 years during the revolutionary period of Ayub Khan. However, it has reached a critical point of the Economic crisis with spiraling inflation, falling of foreign reserves from 17.7 to 6.7 billion dollars over the past year, and tighter global monetary conditions.
In economic figures, the country had a balance of trade deficit for the financial year 2021–2022 of $44.71 billion and $3.35 billion only for July 2022. Moreover, it has a current account deficit of $17.41 billion and $3.13 billion only for July 2022.
Is this to be called managerial incapability, or are the world's monetary conditions to be blamed?
While discussing the causes of the ongoing economic crisis in Pakistan, political instability in this fragile economy is one of the biggest. Pakistan faced a constitutional crisis in the Year 2022 which disrupted the country's economy. Not only did this force the International Monetary Fund (IMF) to delay its promised support in the form of loans, but forced the newly formed weak Government to make tough decisions such as increasing the price of daily commodities. With the change of Government due to political turmoil, foreign and local investors were reluctant to carry on their projects in Pakistan due to financial security concerns.
The managerial incapability has been at its peak for the past two decades since the partition. Each new Government and the financial team has blamed the previous Government for the economic crisis and the challenges the country faces. The Government has never been able to bring about actual stability, at least for the past two decades, due to poor tax culture, poor economic policies, and bad governance. Instead of stopping tax evasion and increasing the number of taxpayers, the Government has raised taxes on those who already pay them. The governments failed to properly use the World Bank's funding to stabilize the developing economy.
Due to the Russia-Ukraine war, the prices of wheat exported by Ukraine increased, creating trouble for countries importing wheat, such as Pakistan. The food and agriculture organization (FAO) reported that the world food price index had reached its highest, creating commodity inflation in Pakistan. Not only this, but the war also began an energy crisis around the world. A country such as Pakistan, which imports much of the oil and does not produce any, suffered the most, resulting in the country's inflation of oil and petroleum products. The sharp rise in commodity prices further complicates the challenge faced by central banks in credibly bringing down inflation to target while safeguarding the post-pandemic recovery.
In account of the crisis Pakistan is facing, the world bank also claimed that the country's GDP may fall by 20 percent by 2050. The reasons are economic turmoil, massive flooding, poor management, tighter global monetary conditions, and political uncertainty. Climate change risks, such as the country's enormous floods, may lead to Pakistan compromising its development aims. These shocks will impact all aspects of the economy at the macro level. They could have negative impacts that further dampen growth projections in the unstable country. The GDP losses Pakistan faces due to its low human capital will increase in case of no recovery plan by the Government.
A nation couldn't establish itself in power with a weak administration. The people in authority had to work for the country rather than their agendas. The funds, for the people, had to go to help the people, not into the pockets of the corrupt. The people should choose a person with strong willpower and determination to tackle the economic and political challenges the country is facing.
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