Pakistan is in crisis.
The worst inflation in Asia,
mass protests,
record energy prices,
and an uptick in terror attacks.
You’re talking about a very, very
important regional market,
regional power.
Pakistan’s economy is sinking.
It has no option but to seek a bailout.
Pakistan was once hailed as a country
that could be an economic rival to its neighbor India
but it's falling further and further behind.
The nuclear-armed country with 240 million people
is living on the edge of ruin.
Behind the scenes, its military is seen as holding sway over government policies.
At the heart of it all, Pakistan is trapped in a cycle of borrowing
that appears to have no end.
The IMF can’t let Pakistan sink.
Pakistan sinks it will be chaos.
And the world can’t afford this big a chaos.
Now the economic situation in Pakistan
has gone from bad to worse.
Pakistan’s year-on-year inflation
hit a record level of 36.5%.
This is the highest-ever increase in nearly 60 years.
I’ve been working in this market for the last 28 years.
We are in trouble.
Paying rent, bills, maintenance. Everything counts.
Earlier, 40 to 50 customers used to visit us daily.
But now, it’s down to two or three people, only.
Even the three years during Covid was better.
Pakistani people are very concerned at this point in time.
You can see people are hopping onto boats
risking their lives to get to Europe somehow or another.
People are borrowing money from loan sharks.
And we have seen last year, at one point one-third of Pakistan
was flooded completely.
And it led to losses and damages of $30 billion.
I will never forget the climate-related carnage I saw.
Lives, homes, livelihoods, schools, hospitals, all obliterated.
It’s expected that such natural calamities
will continue happening.
And Pakistan does not have any funds to deal with it.
Ahead of the general elections
all political parties have promised to take on politically difficult reforms
which will help the country get on sustainable financial footing
but none of them have been able to do so in the past.
We’ve been here before.
And we have seen some of these bailouts actually get halted
over failure to meet certain conditions.
It is very important that Pakistan sticks to the commitments under this program.
Meaning, don’t spend what you don’t have.
Be prudent on tax collection.
One of the big problems Pakistan has is very low tax to GDP.
At the IMF we say if your tax to GDP
is below 15%
you can’t really quite function
as necessary
to fund public services and the state expenditures.
Is Pakistan’s debt sustainable?
It is sustainable but it is borderline sustainability.
Pakistan’s inflows just do not cover its outflows.
Pakistan does not export enough.
Pakistan doesn’t have enough foreign direct investment coming in.
Historically, this gap has been
filled by remittances, bailouts,
and direct injections of cash
from China and Saudi Arabia.
What we are short of is ideas.
What we are short of is rules and laws
that are conducive to growth.
Unfortunately, we don’t understand that.
So we continue to go to beg and borrow.
We continue to build roads. We continue to build all these things
which really do not give you quick growth.
Nadeem Ul Haque worked for the International Monetary Fund
for 24 years.
Now he’s skeptical about the IMF’s policies in Pakistan.
Pakistan is an IMF addict and the IMF is a Pakistan addict.
We are both locked in a death dance.
The fault lies within.
The country’s political system is fraught with instability
with the military directly ruling for almost half of the nation's history
and retaining outsized influence
even when democratically elected governments took power.
The entire status quo, the entire political status quo
is against me right now.
Imran Khan’s government tenure was cut short when he was
removed from power in April of last year.
The government that replaced him oversaw a crackdown
on Khan's political party,
whose leaders are now being tried in military courts.
The caretaker prime minister has previously said
he will ensure fair punishment by law for those involved in violent protests.
We tracked down a member of Imran Khan’s political party,
the Pakistan Tehreek e-Insaf, or PTI.
Can you tell the audience why are you hiding at the moment?
There’s been a crackdown on PTI of the sort that unfortunately
only happens in countries like Pakistan,
with a very clear and singular objective
of dismantling the party.
If we continue to go down the same path that we are going,
if we think we can fix this country without fixing the civil service,
without fixing public sector contracts,
without opening up to the free market,
without political and economic stability,
I don’t want to imagine
what 20 to 30 years down the line will look like.
Pakistan has had a history of violent terror attacks.
Since the Taliban took over Afghanistan in 2021
the situation has gotten much worse.
Pakistan’s first priority is to prevent and counter all terrorism
from and within Afghanistan.
Kakar’s caretaker government took over from Shehbaz Sharif in August 2023.
We spoke to Sharif’s former economic adviser.
We have to widen the tax net.
We have to ensure that everyone is paying their fair share of taxes.
Our tax-to-GDP ratio is far too low.
Responsible privatization is the need of the hour.
We can no longer afford as a country to continue bleeding
in the manner that we have
on account of the state-owned enterprises.
In all this time, Pakistan has been living beyond its means.
All of this is creeping in.
It is impacting people.
That includes people like Jahanzaib, a stock analyst.
He has decided to leave Pakistan for good.
Everyone I know, either they have moved out of the country
or they are desperately looking to move out.
I was driven by the economic uncertainty,
the rapid PKR depreciation,
rampant inflation
and uncertain political environment of the country.
Even though I had a very comfortable job,
I decided this was not what I want to go through everyday.
Life in Pakistan will continue to be dominated by one institution:
The Pakistan army.
It has been a constant throughout decades
and continues to exert influence from behind the scenes.
Some analysts say military interference stops overall progress
but then others argue it’s the only institution
that really can get things done in Pakistan.
Hope seems to be running out for most Pakistanis.
But not for all.
We have to work together to convince our best and brightest
that they have a future here, that we are intent on
and are doing everything we can to make things easier for them.
I’m hopeful.
The majority of people I know aren’t hopeful.
I’m hopeful because hope sustains the world.
If I get disheartened, how will life be? We need to push on.
Pakistan will make it.
The question is, when?