Pakistan's economy is in tatters

Pakistan’s economy is in tatters

2022 is the year that most Pakistanis would view as an unprecedented economic nightmare, with its economy in recession. Pakistan, too, was hit by catastrophic floods, even as political rivalries made the government almost dysfunctional. Monsoon rains hit the country, seriously affecting the lives of 33 million people, while leaving 1,730 dead.

Flood waters submerged a third of the country, washed away more than two million homes, and displaced eight million people. There was naturally an outbreak of waterborne diseases, and 13,000 km of roads were seriously damaged. International studies indicated that the floods caused damage estimated at $30 billion.

According to recent World Bank reports, Pakistan’s economy is expected to grow by about 2 percent in the current fiscal year ending in June 2023. Moreover, the rate of recovery will be gradual, with real GDP growth projected to 3.2 percent, in fiscal . 2024.

Amid all these complexities, there also seem to be differences between Pakistan’s Finance Minister Ishaq Dar and donors such as the World Bank and International Monetary Fund. However, after meetings with officials from the two entities at the ‘International Donor Conference’ in Geneva, Prime Minister Shahbaz Sharif claimed that the meetings were very successful.

He noted, “At the conference, pledges worth $9.7 billion were announced for flood victims in Pakistan.” He added, “The Islamic Development Bank promised $4.2 billion, the World Bank $2 billion, Saudi Arabia $1 billion, the Asian Infrastructure Development Bank $1 billion, the Asian Development Bank $500 million, the US Agency for International Development $100 million, China $100 million, Italy 23 million euros, Japan 77 million dollars, Qatar 25 million dollars, the United Kingdom 36 million dollars, and France 10 million dollars.

The UAE later announced its willingness to contribute $2 billion in economic aid to Pakistan. However, it is clear that the donor countries will not move forward formally until after Pakistan completes its negotiations with the IMF, which should take a few weeks under normal circumstances. While donor countries’ contributions will be on concessional terms, financial institutions will charge their normal rates.

While Prime Minister Nawaz Sharif is said to have pledged large sums to Pakistan, the actual disbursement can only begin after the measures proposed by the government are approved by the International Monetary Fund. On January 11, Finance Minister Isaac Dar revealed that 90 percent of pledges made by international donors were project loans to be implemented over the next three years.

More importantly, Saudi Crown Prince Salman has now signaled his willingness to help Pakistan. He received the new Pakistani army chief Major General Syed Asim Munir in Riyadh. It is now clear that in keeping with its close relations with the Sharif family, Saudi Arabia is ending its virtual boycott of Pakistan, imposed during the Imran Khan years, and is returning to the days of close collaboration with the Nawaz Sharif family. While the Biden administration has agreed to provide $450 million to Pakistan to maintain its fleet of US-supplied F16 fighters, there is no indication that the administration will bear the costs of transporting these weapons to a virtually bankrupt Pakistan.

In a recent television interview, Pakistani Interior Minister Rana Sanaullah announced that Pakistan could target the Pakistani Taliban militants in Afghanistan, if the Afghan authorities in Kabul did not take action against them. The Pakistani government believes that the TTP has between 7,000 and 10,000 cadres stationed in Afghanistan and in the Pashtun tribal areas of Pakistan.

Actually mocking Pakistan, Afghan Deputy Prime Minister Ahmad Yasir warned Pakistan of the dire consequences of the attack on Afghanistan. He syncopated a photo of General Ak Niazi signing Pakistan’s instrument of surrender in Bangladesh, on December 17, 1971. Pakistan has only itself to blame for the rise of the Taliban, because it looked the other way while hosting the Taliban. Leaders and cadres on its soil. Some of these leaders held important ministerial positions in Kabul after the withdrawal of US forces from Afghanistan.

Justified support

Pakistan had justified its past support for the Taliban, claiming that the Taliban’s presence in Kabul gave it strategic “depth” against India. This, after the Taliban colluded with the ISI during the hijacking of IC 814, to Kabul. While New Delhi has not yet officially recognized the Taliban, it has established a proper working relationship with them, providing wheat, medical and other aid to the people of Afghanistan and maintaining an office in Kabul.

Like Russia and China, India has avoided taking a hostile or judgmental stance on its relations with the Taliban. We hope that the food, medical and economic assistance that India provides to the people of Afghanistan will continue in a measured manner. Pakistan is now threatening to attack members of the Taliban residing in the Pashtun-dominated tribal areas, and across the border in Afghanistan, with the apparent encouragement and support of the United States. This would unite the Pashtuns on both sides of the Durand Line to confront the Pakistan Army in a bloody and unwinnable conflict. It is noteworthy that an estimated 374 Pakistani security personnel and 365 TTP militants were killed in the fighting last year.

It has now emerged that there are deep divisions within Pakistan over how to deal with India. Former Pakistani army chief General Bajwa, who had close ties to the US, has been arguing that it is important to take measures to de-escalate tensions with India so that cash-strapped Pakistan can recover from the current economic disaster.

Moreover, realists in Pakistan understand that tensions on its border with India could have dire consequences for the national effort required to restore a measure of political normality and a climate conducive to economic growth. It is now also clear that Pakistan’s relations with the Taliban have become strained and uncertain. Pakistan’s threats to take military action against its Pashtuns in the Taliban movement, whether inside the country or across the border with Afghanistan, will inevitably lead to tensions and conflict not only with the Taliban, but also with the Taliban. leadership in Afghanistan.

The writer is a former High Commissioner for Pakistan

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