Pakistan economic crisis: People of India’s neighbouring country Pakistan, which is probably facing its worst-ever economic crisis since its existence, are now struggling with high petrol and diesel prices. The Pakistani government on Sunday hiked petrol and diesel prices by Rs 35. Now, petrol is being sold in country Rs 249 a litre and diesel is priced Rs 228 a litre.
Adding to Pakistan’s economic woes, its currency is in free fall. The Pakistani currency has fallen by a massive Rs 35 against the US dollar in the last four days. At present, the Pakistani Rupee is valued 250 against the US dollar.
Pakistani rupee crashed to 20-year low
The currency saw its biggest single-day decline in over two decades on Friday after the government relaxed its grip on the currency to get new loans from the International Monetary Fund (IMF).
Money exchange companies in the country removed the limit on the dollar-rupee rate effective January 25 in a bid to allow the local currency drop slowly in the open market.
Pakistan has been hit by the worst economic crisis, grappling with decades-high inflation, lower GDP growth, and depleting forex reserves. The country is desperately looking for funds from the IMF to avoid default but the international financial agency has demanded some concrete reforms which also include an increase in petroleum prices.
Pakistan is reportedly left with only USD 3.5 billion in foreign exchange reserves, which can only cover three weeks of imports. It desperately needs the IMF to release the next USD 1 billion tranche to save from a potential default.
The Pakistan government is planning some austerity measures including cutting the salaries of central employees, reducing the count of federal ministers and curbing expenses of ministries.
Pakistan Prime Minister Shehbaz Sharif has also formed a National Austerity Committee (NAC) to suggest ways to lower cost expenditures of various departments. The committee has proposed 10 percent salary cut for government employees and 15 percent cut in expenditures of ministries and divisions, as per local media reports.
