Pakistan is facing an economic crisis with looming political instability which is coupled and defaulting on debts & electricity outages throughout the country.
A scenario that seems like Armageddon, has taken the country by storm. Political instability has been a consistent problem and major changes in the ruling party have been making investors and businessmen lose confidence in the local markets. The PTI Prime Minister was ousted just a couple of months back after serving 3 years in office. The government of Punjab was taken over by PML(N) & now the recent by-elections are going to change the government of Punjab once again. Such a lot of uncertainty and undulating pace of a government is no place for a business or economy to prosper, it only suffers.
The Dollar has been fighting an easy battle against the rupee. So many factors have made people lose confidence in the rupee as there is a spree of panic buying of the dollar by banks in the interbank market.
The Rupee is trading at 224 in the interbank market which just 5 days ago was trading at 210. That is a loss of 14 Rs!
The State Bank of Pakistan has been trying to make an argument against the losing value of the Rupee by explaining through graphs how the greenback has been making its way against all currencies.
Furthermore, they have also explained very nicely how the rupee has been affected by political and international happenings in a graphic tweet.
Fitch downgrades Pakistan’s rating
The fact of the matter stays the same, the depreciation of the rupee is alarming. Just a day ago, rating agency Fitch revised Pakistan’s outlook from ‘stable’ to ‘negative’. This is largely due to the fiscal deficit the country is facing.
This is what they had to say:
“We expect debt/GDP to decline to 66pc in FY23 and remain on a downward trend, helped by high inflation and a modest primary deficit, which we forecast at 0.9pc of GDP in FY23, down from 2.8pc of GDP in FY22.”
Market capitalization lowest since June 2010
In dollar terms, the market capitalization declined nearly five percent on a day-on-day basis to $30.7 billion. According to Topline Securities, this was on the account of “rising political and economic problems”.
Speaking with Dawn, JS Global AVP Mubashir Anis had this to say:
“Investors are getting jittery about political developments derailing the International Monetary Fund (IMF) loan program and other multilateral flows expected to materialize afterward.”
The amalgamation of the crisis is very serious and Pakistan needs to come up with concrete plans to get out of it.