Gravitas Plus: Pakistan's Economic Crisis Explained
Summary
TLDRPakistan is grappling with a severe economic crisis marked by a shortage of basic medicines, staggering 31.5% inflation, and skyrocketing food and fuel prices. The Pakistani rupee has plummeted to an all-time low against the dollar, and the country faces a debt repayment of $22 billion with foreign reserves of merely $3.2 billion. Unemployment is rising, and the GDP growth forecast has been revised down to 4.3%. The IMF is demanding austerity measures and reforms before releasing further bailout funds, highlighting the urgent need for the country's leaders to address the crisis and find a path to recovery.
Takeaways
- 😷 Pakistan is facing a severe economic crisis with shortages in basic medicines.
- 📈 Inflation in Pakistan has reached a staggering 31.5%, the highest since 1974.
- 🍗 Food prices have skyrocketed, with milk costing 235 Pakistani Rupees per liter and boneless meat at 1000 Pakistani Rupees per kg.
- 📉 The Pakistani Rupee has plummeted to an all-time low of 278 against the US dollar.
- 🏭 Over 1 million Pakistanis are at risk of losing their jobs, primarily in the textile sector.
- 📊 Unemployment is on the rise, projected to increase to 8.5% in 2023.
- 💹 The GDP growth forecast for 2023 has been reduced to 4.3%.
- 💵 Pakistan's foreign reserves are critically low, with only $3.25 billion remaining.
- 🚗 Despite economic turmoil, Pakistan saw imports of luxury cars amounting to $1.2 billion in the past six months.
- 🏛️ The IMF has stalled further bailouts until Pakistan meets certain conditions, including setting up an anti-corruption task force and increasing taxes on luxury goods.
Q & A
What is the current state of Pakistan's economy according to the script?
-Pakistan's economy is in a critical state, described as being in the ICU with a shortage of basic medicines, high inflation, and a falling currency value.
What is the current inflation rate in Pakistan as mentioned in the script?
-The inflation rate in Pakistan stands at 31.5 percent, which is the highest since 1974.
What are some of the food prices mentioned in the script that indicate the economic crisis?
-Milk is selling at 235 Pakistani Rupees per liter, a kg of chicken costs between 700 to 780 Pakistani Rupees, and boneless meat is at 1000 Pakistani Rupees per kg.
How does the script describe the value of the Pakistani Rupee against the US Dollar?
-The value of the Pakistani Rupee is at an all-time low, with 278 Rupees to 1 US Dollar as of the week mentioned in the script.
What is the potential job loss situation in Pakistan's textile sector according to the script?
-Over 1 million Pakistanis could lose their jobs, primarily in the textile sector.
What is the projected GDP growth for Pakistan in 2023 as per the script?
-The GDP growth forecast for Pakistan in 2023 has been trimmed to 4.3 percent.
How much does Pakistan have left in foreign reserves according to the script?
-Pakistan has just 3.25 billion dollars left in foreign reserves.
What is the current debt situation of Pakistan as described in the script?
-By the end of December 2022, Pakistan's total external debt stood at 17.87 trillion Pakistani Rupees.
What measures is Pakistan taking to secure an IMF bailout as mentioned in the script?
-Pakistan has nearly doubled gas prices, hiked taxes on luxury goods and services, and is expected to announce similar increases in the price of electricity to secure an IMF bailout.
Why is the IMF hesitant to provide further financial assistance to Pakistan according to the script?
-The IMF is hesitant due to concerns that Pakistan may not be able to repay the loan and because the wealthy in Pakistan contribute very little to the economy.
What does the script suggest as a way for Pakistan to recover from its economic crisis?
-The script suggests that Pakistan's leaders need to put aside their differences, build consensus, and address the economic issues collectively to recover from the crisis.
Outlines
🇵🇰 Pakistan's Economic Crisis
The video discusses the severe economic crisis in Pakistan, highlighting a shortage of basic medicines, a staggering inflation rate of 31.5%, and skyrocketing food and fuel prices. The Pakistani Rupee has plummeted to an all-time low against the US dollar, with the country's Forex reserves dwindling to a critical $3.25 billion. Unemployment is on the rise, with the textile sector at risk of massive job losses. The country's GDP growth forecast for 2023 has been revised downward to 4.3%. The situation is further exacerbated by a high number of terrorist attacks, with 58 incidents in February alone. The video suggests that Pakistan's economy is on the brink of collapse due to its massive external debt, which stands at 17.87 trillion Pakistani Rupees, and the urgent need to repay $22 billion to foreign lenders in the same year.
📉 Pakistan's Credit Downgrade and IMF Bailout Conditions
The video continues by exploring the implications of Pakistan's downgraded credit rating by Moody's from caa1 to caa3, reflecting the country's inability to cover its import needs and external debt obligations. This downgrade will affect Pakistan's ability to attract foreign investment due to increased risk of debt default. The IMF has stalled further bailouts until Pakistan meets certain conditions, including setting up an anti-corruption task force, increasing electricity tariffs, and imposing levies on petroleum products. Pakistan has taken steps to secure the bailout by raising gas prices and taxes on luxury goods. The video also criticizes the lack of contribution from wealthy Pakistanis to the economy, pointing out that they continue to enjoy luxury lifestyles while the country struggles. The IMF's managing director emphasizes the need for the rich to contribute more, especially when the poor are suffering. The video concludes by suggesting that Pakistan can recover if its leaders can put aside their differences and work together to address the economic crisis.
Mindmap
Keywords
💡Economy in the ICU
💡Inflation
💡Foreign Exchange Reserves
💡Debt
💡IMF Bailout
💡Austerity Measures
💡Unemployment
💡GDP Growth Forecast
💡Currency Devaluation
💡Luxury Imports
💡Terror Attacks
Highlights
Pakistan is facing a severe economic crisis with shortages in basic medicines.
Inflation in Pakistan has reached a staggering 31.5 percent, the highest since 1974.
Food and fuel prices are soaring, with milk costing 235 Pakistani Rupees per liter and petrol at 272 per liter.
The Pakistani Rupee has plummeted to an all-time low of 278 against the US Dollar.
Over 1 million Pakistanis may lose jobs, particularly in the textile sector.
Unemployment is projected to rise to 8.5 percent in 2023.
GDP growth forecast for 2023 has been reduced to 4.3 percent.
Pakistan's foreign reserves have dwindled to a mere 3.25 billion dollars.
Terror attacks in February alone reached 58, averaging over two per day.
Pakistan's economy is unstable, with a total external debt of 17.87 trillion Pakistani Rupees.
Pakistan is required to repay 22 billion dollars in 2023, putting immense pressure on its reserves.
Foreign direct investment in Pakistan has plummeted by 44% in the first seven months of the fiscal year.
Moody's has downgraded Pakistan's credit rating from caa1 to caa3 due to insufficient foreign reserves.
The IMF has stalled further bailouts until Pakistan meets certain conditions, including anti-corruption measures and tax hikes.
Pakistan has increased gas prices and is expected to raise electricity prices to secure an IMF bailout.
The IMF is urging rich Pakistanis to contribute more to the economy, as they currently benefit from subsidies meant for the poor.
Pakistan's leaders need to build consensus and resolve the economic crisis to prevent further decline.
Transcripts
hello and welcome to gravitas plus I am
Molly camphir Pakistan is in a state of
mess
the economy is in the ICU the
politicians are at War and the people
are crying for help
I Know What You Must Be Wondering
what new here Pakistan has been in a
Perpetual state of mess since its birth
well yes it has but this time it's one
hell of a mess
look at the developments there is a
medicine shortage Pakistan does not have
even basic medicines like discipline
Panadol calpol brufim if I speak of
inflation it stands at 31.5 percent
not since 1974 has Pakistan seen such a
high rate of inflation
if I speak of food prices they are
touching the sky milk is selling at 235
Pakistani Rupees per liter a kg of
chicken costs 700 to 780 Pakistani
Rupees boneless meat is selling at 1000
Pakistani Rupees per kg
same story with fuel prices petrol is
selling at 272 Pakistani Rupees per
liter diesel is selling at 262 Pakistani
Rupees per liter kerosene at 217 per
liter if I speak of the currency it's
falling like a bungee jumper only that
we doubt if it will be able to bounce
back as of this week the value of the
Pakistani rupee is 278 against the
dollar this is an all-time low if I
speak of jobs last we checked over 1
million pakistanis could lose their jobs
mostly in the textile sector
if I pick off unemployment if been on a
steady ride since 2019 this year that is
2023 it is projected to grow further to
8.5 percent
if I speak of the GDP for 2023 the GDP
growth forecast has been trimmed to 4.3
percent if I speak of Forex Reserves the
cash and other assets held by Pakistan
Central Bank it's another tragic story
Pakistan has just 3.25 billion dollars
left in foreign Reserves and let's not
even talk about Terror in the month of
February alone terrorists managed to
carry out 58 attacks in Pakistan 58
attacks in 28 days that's an average of
over two per day this is another record
in itself
now we understand that breaking records
is a good thing but Pakistan seems to be
breaking records in a race to the bottom
so much so that the people of Pakistan
are making fun of the State of Affairs
they are making memes because memes seem
to be the only affordable thing for them
at the moment the question is why is
Pakistan in such a critical situation
and what can it do to climb out of this
hole well to start with Pakistan's
economy has always been unstable the
difference now is that its nearing
collapse this is primarily because of
the country's debt
according to the World Bank by the end
of December 2022 Pakistan's total
external debt stood up
17.87 trillion Pakistani Rupees I repeat
17.87 trillion this is one of the
highest levels of debt the world over
and what's worse Pakistan has to repay a
large chunk of this amount and repay it
right away in fact one report says that
in 2023 alone Pakistan will have to
repay 22 billion dollars to foreign
lenders but to repay this amount it
needs cash
where is it going to get this cash from
God knows
I told you about the Forex Reserves
usually countries meet their debt
obligations from the money that they
have in Forex reserves Pakistan needs to
repay 22 billion dollars in that
but it has just 3.2 billion dollars in
reserves
how on Earth will it manage to repay
this
again God knows in most cases countries
tend to make up for debt through new
Investments that they receive
foreign direct Investments or FDI to be
precise Pakistan is suffering on that
front as well
have a look at this report
Pakistan's FDI plunged 44 during the
first seven months of this fiscal year
if we break it down further in the last
fiscal year Pakistan received 1.22
billion dollars in FDI in this fiscal
year it has received just
683 million dollars
which means foreign investors are wary
about sending money to Pakistan and we
don't blame them have a look at this
report now global ratings agency Moody's
has cut Pakistan's Sovereign credit
rating earlier the rating was caa1 it
has now been downgraded to caa3 why is
that because of Pakistan's foreign
Reserves
they are far less than necessary to
cover its Imports also less than its
external debt obligations in the
immediate term Modi says this has raised
the risks of a debt default hence the
downgrade so how will this impact
Pakistan well these ratings will come
into play every time Pakistan gets a
foreign investor these investors will
assess islamabad's ability to repay
loans and live up to the Investments
based on its credit rating simply put
this report is going to hurt Pakistan
financially it could make the current
turmoil even worse and what about the
IMF why is it not helping Pakistan
because it has already done enough
so it has stalled the bailout
it says Pakistan needs to implement
certain conditions before it gives out
another bailout to the country what
conditions basically setting up an
anti-corruption task force hiking
electricity tariffs imposing a levy on
petroleum products is Islam about doing
this
it has no option have a look at this
headline in its bid to secure the
bailout Pakistan have nearly doubled the
gas prices and if reports are to be
believed it is expected to announce a
similar increase in the price of
electricity Pakistan has also hiked tax
on luxury goods and services so that it
could get an IMF bailout Reports say
taxes on a raft of luxury Imports will
be increased in order to unlock the next
batch of an IMF loan and by the way this
increases just the beginning Pakistan's
Finance Minister says that in the days
ahead the Prime Minister could introduce
more austerity measures to meet the
imf's demands and this makes you wonder
why if the IMF after Pakistan why can it
not just give the money well there are a
host of reasons and two of them stand
out one the fear that Pakistan will not
be able to repay the loan like we've
been saying and number two the fact that
rich pakistanis contribute very little
to the economy let me read out a
statement from the imf's managing
director who summed up the situation
quite well I'm quoting those who are
making good money in public or private
sectors need to contribute to the
economy it shouldn't be that the wealthy
benefit from subsidies it should be the
poor who benefit from them so the IMF
wants Rich pakistanis to do their bit
because at a time when the poor are
suffering the Richie Rich are still
living a life of luxury they are buying
luxury cars importing them from abroad
in fact Reports say during the last six
months Pakistan spent 1.2 billion
dollars on Imports of luxury cars
high-end electric vehicles and spare
parts the list of buyers consists of
Pakistani businessmen as well as the
country's Army generals both current
index
look at this report Dawn carried it last
year it says ex-military officials in
Pakistan were allowed import of tax-free
bulletproof vehicles
can you imagine that this only tells you
about the misplaced priorities of not
just the Pakistani government but also
its rich and Elite
instead of helping the government
instead of donating money to the poor
the rich are basking in the glory of
their Fortune as the economy sinks to
the bottom of the battle the question is
is there a way out can things be fixed
can Pakistan recover yes it can
but to do that the leaders of the
country who cannot stop abusing each
other will have to put their differences
aside and build consensus to resolve the
mess
as they say an eye for an eye makes the
world blind but unfortunately the
country's leaders seem to be turning a
blind eye to the common man's misery
[Music]
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