Daily Times

Pakistan is currently in a severe financial predicament. The cash shortage reduced reserves to an eight-year low of $5.576 billion during the week ending December 30, 2022. Because of this downturn, the government was unable to satisfy its foreign debts without borrowing from friends. The SBP’s foreign exchange reserves fell by $245 million during the week due to the repayment of external debt.

The coalition government, led by the PMLN, which is facing a real threat of default, is primarily concerned about how to service its foreign debt. There have been repeated failed attempts, to restart talks with the IMF regarding delivering the next payment. Due to falling reserves, the local currency has already been considerably undervalued in contrast to the US dollar and other major currencies. The SBP’s foreign exchange reserves fell by $11 billion in January 2022, from $16.6 billion in January 2022 to $5.6 billion. The prime minister stated in October 2022 that the Saudi Crown Prince would visit and deliver $10 billion to develop an oil refinery, but the trip was postponed for unclear reasons, and the money never arrived. General Asim Munir recently visited Saudi Arabia and spoke with the crown prince, following which the Saudi Prince directed the Saudi Development Fund to consider increasing the deposit amount in the State Bank of Pakistan from $3 billion to $5 billion.

Although the generosity of the Kingdom of Saudi Arabia will alleviate some of Pakistan’s financial issues, it is unlikely to address all of them. Pakistan is currently known for begging and requesting assistance from friends and allies. Even this aid and investment will eventually dry up, and the government should prepare for this possibility. The current situation in the country can be attributed to this, the previous, and all previous regimes. It is not the responsibility of a single individual or administration, but of collective policies implemented over the time.

Successive governments must establish and implement policies that benefit the country as a whole, not just their political agendas and vote totals. Pakistan must be prepared to tackle problems such as crashing financial markets, oil price booms, and climate calamities in the coming years, among other things. Without strong policies and proper implementation, the country is doomed, and no friend or ally will step in to help. This wave of help, investments, and loans should be considered the last that Pakistan will ever receive. *