While Pakistan’s economy was already in an extremely bad shape, the coronavirus pandemic has dashed any hopes of revival, even in the next fiscal year. So much so that the country is in for something it has managed to avoid even in the worst of times — like when it split, in 1971. A recent World Bank report has warned of a recession in the country — for the first time during its existence, barring the initial years after the independence — due to the severe impact of the deadly virus. It says that Pakistan’s economy could register a negative growth rate of 2.2% in the worst case scenario and 1.3% in the better scenario. And with the population growing at 1.8%, the negative economic growth implies a painful decline in per capita income, warns the report titled ‘South Asia Economic Focus’. The horrifying World Bank predictions feature: a significant fall in remittances; continued portfolio outflows; and growing inability to manage foreign debts.
The little fiscal space available with the government pre-corona has been eroded further by a massive investment in the healthcare infrastructure to cope with the mushrooming infection as well as by the government handing out financial packages to keep the virus-infected businesses afloat and to reach out to a large segment of the population which has been rendered out of work due to the lockdown across the country. And a continued closure is feared to terribly affect retail trade, land transportation, entertainment, accommodation and restaurants, tourist services, water transport and air transport. This is bound to increase unemployment in the country — from 2.4% to 9% in the various sectors of the economy, according to the World Bank report.
No wonder Prime Minister Imran Khan has, in a video message, appealed to major world powers and global lenders to “launch an initiative to give debt relief to developing countries” that are fighting to curb the spread of the coronavirus. However, a debt relief — to be discussed during an upcoming IMF-World Bank meeting — may only be expected in the form of rescheduling, allowing for delayed repayment. Tough time indeed — for the government and the people.
Published in The Express Tribune, April 14th, 2020.
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