Pakistan had a big hope from IMF, but IMF has also given a blow to it. On the other hand, inflation is also at its peak there, shortage of flour, skyrocketing prices of petrol, shortage of electricity and if the condition of the country immersed in darkness continues like this for a long time, then this country of Jinnah may disintegrate in the future.
Poor Pakistan extended its hands in front of IMF 23 times in 75 years, did not get alms
Debt-ridden Pakistan has once again suffered a severe blow. The International Monetary Fund (IMF) has rejected the proposal to give loan to Pakistan. Let us tell you, Pakistan is going through bad situations these days. His economy is badly broken. He is repeatedly begging for loan by going to every country with a bowl.
China has given him a lot of loan, but his interest rate is very high. He had a big hope from IMF, but IMF has also given him a blow. On the other hand, inflation is also at its peak there, shortage of flour, skyrocketing prices of petrol, shortage of electricity and if the condition of the country immersed in darkness continues like this for a long time, then this country of Jinnah may disintegrate in the future.
Pakistan went to IMF 23 times in 75 years
Pakistanis running in the Global Emergency Ward 23 times in 75 years is no way to run the country. He also told what are the reasons why Pakistan could never separate itself from the IMF. He told that a country usually goes to the IMF when its foreign exchange reserves are exhausted. Foreign exchange reserves are used to pay for imports and to pay back money borrowed from abroad.
How countries increase foreign exchange reserves
A country can build up foreign exchange reserves in one of two ways. In simple words, it can increase foreign exchange reserves. Firstly, it can do so by running current account surplus. This is a situation where remittances from exports and workers working abroad exceed imports. Second, even if it runs a current account deficit (as opposed to a surplus), it can build up reserves that exceed this deficit by drawing on foreign exchange inflows in the form of debt or equity.
Pakistan has never had a current account surplus
Unlike the big economies of Asia, rarely in history has Pakistan run a current account surplus. Sometimes Pakistan’s current account deficit has been huge. For example, during 2017-19 and 2022, the current account deficit is running at over 3 per cent of GDP. Whenever this has happened, Pakistan has usually had to go to the IMF soon after. Pakistan’s current account deficit is because their exports have always been very weak. As a part of Pakistani economy, exports are only around 10 percent. In successful countries, the share of exports is very high, typically 20–30 percent of GDP.
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