Pakistan has undergone numerous economic restructuring efforts and presently functions as a mixed economy with a substantial contribution from state-owned enterprises to its gross domestic product (GDP). Over the years, Pakistan has experimented with various economic models, initially relying heavily on private enterprise until significant sectors, including financial services, manufacturing, and transportation, were nationalized in the early 1970s. Since the 1990s, the state has been privatizing large portions of the previously nationalized economy. The economy, which was primarily agricultural during independence, has diversified considerably, with agriculture now contributing roughly one-fifth of GDP, while manufacturing accounts for about one-sixth. The trade and services sector, which combined form the most significant component of the economy, has seen substantial growth post independence.
Imran Khan in Power
In 1992, Imran Khan led Pakistan's national cricket team to a World Cup victory, which elevated him to national hero status. He later entered politics as a vocal critic of government corruption in Pakistan. In July 2018, elections were held, and Khan campaigned on a platform of tackling poverty and corruption, although he faced allegations of being too close to the military establishment. Despite these accusations, Khan's party, the PTI, won the most seats in the National Assembly, enabling him to seek a coalition with independent members of parliament and become prime minister on August 18.
As prime minister, Khan faced a challenging balance-of-payments crisis, with mounting imports and debt commitments from previous years. This situation was exacerbated by the China-Pakistan Economic Corridor initiative, and the crisis worsened when the United States withheld $300 million in military aid, citing Pakistan's inadequate action against terrorism. Khan attempted to secure foreign aid from "friendly countries" before turning to the International Monetary Fund (IMF), which had previously failed to resolve Pakistan's macroeconomic issues. His reluctance to seek IMF aid reflected the public's disillusionment with the organization.
Despite his efforts to secure funding from other countries, Khan eventually requested emergency lending from the IMF. He also continued to seek aid from other sources, eventually receiving pledges of investment from China, Saudi Arabia, and the United Arab Emirates.
Political crisis
The onset of the COVID-19 pandemic in early 2020 exacerbated Pakistan's existing economic difficulties. While his critics contended that he was slow to endorse a lockdown, Imran Khan was hesitant to implement such measures. In contrast, the Sindh provincial government, which was controlled by an opposition party, swiftly imposed a strict lockdown in March. Eventually, Khan's government introduced a nationwide lockdown in April, later restricting it to areas with high infection rates in May.
It is worth noting that no previous prime minister of Pakistan had managed to complete a full term in office. Unfortunately, Imran Khan suffered a similar fate to his predecessors on April 10, 2022, when he was removed from office through a long-delayed no-confidence vote. This marks the first instance in which a no-confidence motion against a prime minister of Pakistan has been successful.
Floods in Pakistan
The devastating floods in Pakistan have been caused by seasonal monsoon rains, which have worsened due to global climate change. These floods are unprecedented and have affected a staggering 33 million people since mid-June 2022, causing over 1,730 deaths. At one point, floodwaters engulfed one-third of the country, resulting in the destruction or washing away of over 2 million homes, the loss of 1.2 million livestock animals, and damage to 13,000 kilometers of roads. As a result, 8 million people, including 644,000 residing in relief camps, have been displaced. While the floodwaters have receded, 7% of the land remains flooded. A comprehensive assessment of the damage, loss, and needs caused by the floods has recommended "building back better" by prioritizing the needs of the poor, ensuring transparency and inclusivity, and enhancing climate resilience. The assessment suggests that the total damages caused by the floods may exceed USD 14.9 billion, and total economic losses may be around USD 15.2 billion. The estimated cost for rehabilitating and reconstructing in a resilient manner is at least USD 16.3 billion, which does not include new investments necessary to help Pakistan adapt to climate change and enhance its overall resilience against future climate shocks.
Economic crisis
Under the leadership of Shehbaz Sharif and the PML-N, the economy of Pakistan continued to deteriorate, compounded by a series of disasters including catastrophic flooding, political paralysis, inflation, and a resurgent terror threat, posing a risk of pushing the country into a full-blown crisis. Pakistan heavily relies on imports for its energy production due to insufficient investment in exploration and development activities, resulting in about 40% of its total primary energy supply being imported. The country's energy sector is highly dependent on fossil fuel imports, such as oil and coal, due to inadequate exploration and development activities. Pakistan's foreign reserves have dwindled to a mere $3.7 billion, which is insufficient for a few weeks of energy imports to sustain the country's cities and businesses, and its public debt has surged to $270 billion. The war in Ukraine, along with other developing countries, forced Pakistan into a bidding war over scarce liquid natural gas, which it has been unable to afford. The economic pressure is already impacting the basic needs of Pakistanis, as evidenced by an unprecedented nationwide blackout in late January that lasted over 24 hours, the cause of which remains unclear but may be a harbinger of things to come.
Security crisis
For a long time, Pakistan’s economy has been characterized by corrupt policies that favored civilian elites and military officials with subsidies, while neglecting the majority of the population working in industries like agriculture and textiles. However, the foreign funding that supported the luxurious lifestyles of Pakistani elites appears to be dwindling. In recent months, Pakistan has experienced a resurgence of terrorism from radical Islamist groups and ethnic militants in the resource-rich province of Balochistan. The Pakistani Taliban, responsible for the deaths of thousands of Pakistanis during the war on terror, announced its return with a devastating suicide attack last month that killed over 100 worshippers at a mosque during Friday prayers. This attack is a warning that instability in neighboring Afghanistan, which suffered tens of thousands of deaths during the two decades of U.S. occupation, may once again spill over into Pakistan.
Currently, Pakistan is facing three crises that are interconnected: an economic crisis, a political crisis, and a security crisis. Addressing the economic and political crises is crucial to effectively addressing the security crisis, as failure to do so could make this nuclear nation a threat to the global community. It is imperative that every individual and country extend their support to Pakistan during these challenging times, so that future generations can focus on growth and development, instead of grappling with the threat of terrorism.
References : https://www.brookings.edu/blog/order-from-chaos/2023/01/13/pakistan-five-major-issues-to-watch-in-2023/
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