Pakistan is currently facing an economic crisis, which has been exacerbated by the COVID-19 pandemic. The country’s economy was already struggling before the pandemic hit, but the lockdowns and other measures taken to contain the virus have had a severe impact on businesses and the economy.

Inflation:

Inflation is a major problem in Pakistan, with prices of essential goods skyrocketing in recent months. According to the State Bank of Pakistan, the inflation rate in March 2021 was around 9.1%, which is much higher than the central bank’s target of 5-7%. This has hit the poor and middle-class people the hardest, as they struggle to make ends meet in the face of rising prices.

Foreign exchange reserves:

Pakistan’s foreign exchange reserves have also been declining, putting pressure on the country’s currency, the Pakistani Rupee. In March 2021, the country’s foreign exchange reserves fell to $12.9 billion, which is barely enough to cover two months of imports. This has raised concerns about the country’s ability to pay for its imports, which could lead to a balance of payments crisis.

Debt:

Pakistan’s debt has also been rising, with the country owing around $113 billion to foreign lenders. This debt burden has been increasing rapidly in recent years, and the pandemic has made it even worse. The government has had to take out more loans to finance its spending, which has increased its debt further.

Unemployment:

Unemployment is another major problem in Pakistan, with the pandemic causing many businesses to shut down and many people losing their jobs. According to the Pakistan Bureau of Statistics, the unemployment rate in the country was around 5.7% in 2019-20, but it is expected to have risen significantly since then.

Government response:

The Pakistani government has taken a number of steps to try and address the economic crisis. It has negotiated loans from the International Monetary Fund (IMF) and other lenders, and has also launched a number of initiatives to boost the economy, such as the construction of new dams and highways.

The government has also launched the Ehsaas program, which is aimed at providing financial assistance to poor and vulnerable people in the country. However, critics have argued that these measures are not enough, and that more needs to be done to address the underlying problems in the economy.

Conclusion:

The economic crisis in Pakistan is a complex issue, with many different factors at play. While the government has taken some steps to address the problem, it is clear that more needs to be done to tackle issues such as inflation, debt, and unemployment. The pandemic has made the situation even more challenging, and it will likely take time and concerted effort to turn things around.