Amid economic turmoil in Pakistan, its Prime Minister Shahbaz Sharif expressed regret over the situation and said that it was shameful for a nuclear country to beg in front of other countries to meet the basic demands of its citizens. Sharif’s statement came nearly two days after the United Arab Emirates agreed to extend a $2 billion line of credit to Islamabad.
The Middle Eastern country has also pledged to provide an additional $1 billion as Pakistan struggles to recover from devastating floods this summer and a severe economic crisis.
“Debt is not a good option”
According to The News International, PM Sharif, while addressing the passing-out ceremony of probationary officers of the Pakistan Administrative Service (PAS) on Saturday, said that it really embarrassed him to seek more loans, adding that seeking foreign loans was the right thing to do. There was no solution. He said the loans would further add to the worsening situation, amid the fact that it would have to be repaid within a specified time period.
Significantly, the country is facing the worst economic crisis since three months of floods, which washed away almost all the major crops of the country. However, the situation was not “right” for Pakistan even before the natural disaster hit the country. According to several local media reports, even in the first week of August, edible oil sold at Rs 600 per liter and ghee at around Rs 700 per litre. The situation turned critical after deadly floods, in which more than 2,000 people died and thousands went missing.
In December, local media reported that the price of cooking gas rose to Rs 1,200 per kg near the Afghan border areas, while the price of flour rose to Rs 160-170 per kg.
Pakistan does not have much time to act
According to the publication’s official sources, the government does not have much time to act as foreign exchange reserves held by the State Bank of Pakistan (SBP) are rapidly depleting. As of January 6, the foreign exchange reserves with the SBP were just $4.3 billion.
Foreign exchange reserves of commercial banks stood at US$5.8 billion, making the country’s cumulative reserves around US$10.18 billion. SBP reserves declined by USD 12.3 billion in last 12 months; From US$ 16.6 billion on January 22, 2022 to US$ 4.3 billion on January 6, 2023, The News International reported.
The report said that friendly countries such as Saudi Arabia are “studying” the possibility of depositing an additional $2 billion, but it is not yet clear how long it will take them to make a decision.
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