A double whammy for Pakistan: Political instability and economic decline
New Delhi: Pakistan confronts an existential crisis far more critical than its economic troubles.
The threat stems from what World Bank country director Najy Benhassine has described as the “persistently low quality of basic services for human development”, which is both the cause and effect of the economy’s frequent boost-and-bust cycles, as per an editorial in Dawn.
“The decline in human development indicators is reflected in the stunted growth of 40 per cent of our under-five population. Nearly 7 per cent of our children do not even make it to their fifth birthday. A majority of citizens have little access to clean water, waste and sanitation services, basic healthcare or proper nutrition and education — both in remote regions and major cities.
“An average Pakistani receives only eight years of schooling. We have the highest infant mortality rate in South Asia and the lowest life expectancy. With six beds per 10,000 people and one doctor for every 1,300 individuals, we face a severe health crisis,” the editorial said.
“As the years go by, Pakistan’s human development indicators continue to worsen and its position on the index keeps slipping. This is evidence for Mr Benhassine that Pakistan’s current economic model is not working. He recently wrote in a UNDP publication that Pakistan had ‘fallen behind its peers, significant progress with poverty reduction has now started to reverse, and the benefits of growth have accrued to a narrow elite’,” the editorial said.
The year 2023 was another tumultuous year for Pakistan. It saw much uncertainty in the country — about the economy and how its volatile politics will pan out, writes Maleeha Lodhi, former Pakistan Ambassador to the US, the UK and the UN, in Dawn.
Nawaz Sharif’s political comeback was nothing short of remarkable. Over two decades ago, when he was exiled following a military coup, many believed his political career was over. But he came back to win the 2013 election and become prime minister for the third time.
Having returned now and able to secure favourable court verdicts in politically-motivated cases in which he had been convicted, he quickly positioned himself for a fourth bid for prime ministership, Lodhi wrote.
But more than politics it was the economy that emerged as the crucial factor to determine the country’s fate and fortunes in 2024 and the years ahead.
A slew of negative trends continued through the year — internal and external financial imbalances remained wide, foreign exchange reserves depleted to a fragile level, inflation hit a historic high, domestic and foreign debt reached unsustainable levels, the rupee lost record value against the dollar, growth stagnated, exports fell, overseas remittances declined and foreign direct investment remained dampened, Lodhi wrote.
The most politically significant development of the outgoing year was the irrevocable breakdown of Imran Khan’s relations with his erstwhile backers in the military establishment. When violent protests broke out on May 9 over his (then temporary) arrest, PTI supporters attacked and vandalised military installations and government buildings. This and Khan’s persistent allegations that the military was behind a US-inspired plot to unseat him sealed his fate, the article said.
In August, Khan was arrested after his conviction by the Islamabad High Court in a corruption case that held him guilty of illegally selling state gifts.
The conviction banned Khan from contesting elections and holding public office for five years. Over a hundred other cases were registered against him. A sweeping crackdown saw arrests of PTI leaders and activists while some were coerced into abandoning the party.
At one point, Pakistan’s official foreign exchange reserves had dwindled to $3 billion, insufficient to finance even three weeks of the country’s import bill. Concurrently, inflation peaked at Pakistan’s highest-ever single-month level of 38 per cent, amid heightened political conflict and an unprecedented crackdown compromising civic rights, The Express Tribune reported.
The country averted default after its chief executive intervened, giving personal guarantees to the IMF for future fiscal and economic responsibility. However, for the second time in four years, Pakistan’s economy contracted by 0.3 per cent, driven by steep import restrictions to make room for debt repayments. The remainder of 2023 was a struggle to balance the budget and keep the country afloat, the report said.
The 23rd year of the century unleashed unprecedented economic hardships on the majority, with the costs of electricity, heating, cooking, education, and daily affairs soaring, resulting in diminished purchasing power.
The country’s de-jure and de-facto rulers could not offer solace to the majority, who suffered under record inflation. Official briefings revealed how people were burdened by financing the electricity and gas bills of others, robbing them of their hard-earned money, The Express Tribune reported.