Last Updated: January 18, 2023, 11:07 IST
Pakistan’s Prime Minister Shehbaz Sharif and Chief of Army Staff General Syed Asim Munir sought $4 billion financial aid from the UAE and Saudi Arabia to ensure the country does not plunge into default amid shrinking foreign exchange reserves.
According to a top source within the government, the UAE had conveyed it clearly to Pakistan to review its policies and plan better relations with neighbours (India).
A Pakistan English daily also pointed out while Pakistan is sliding deeper into economic crisis, Sharif is “begging” the world for financial support, while India is “progressing” day by day.
Let’s look at the top 10 reasons why the Pakistan’s PM is seeking help from India:
1. After the change of government in Pakistan, the country’s economy has paralysed, and is struggling to avoid economic default.
2. Pakistan have almost zero reserves in its Central Bank — (State Bank of Pakistan has only $4.2 billion, which means Pakistan has only two-third weeks of import billing. Its foreign exchange reserves have dipped to $5.6 billion from $16.6 billion in January 2022. Pakistan will have to repay nearly $8.3 billion in shape of external debt servicing over the next three months (January to March) of the current fiscal.
3. Pakistan decreased its defence budget for 2022-23 from 2.8% of the GDP to 2.2%. Army spokesperson General Babar Iftikhar said the budget allocation was reduced after factoring in inflation and rupee depreciation. This means it cannot afford to have any military conflict on its border. The country has been in war with the Tehreek-e-Taliban Pakistan (TTP) and other terrorists since 2002. According to defence sources, the Pakistani Army cannot feed its soldiers two times a day.
4. A source in the Pakistan finance ministry said the International Monetary Fund (IMF) is demanding a major cut in Pakistan’s military budget as had been done by Sri Lanka recently.
5. The 2022 flash floods washed out Pakistan’s agricultural land and caused damages almost $40 billion in infrastructure and crops.
6. Pakistan does not have enough vegetables, rice and wheat to meet its demand. It can’t even afford imports with low dollar reserves.
7. The country is facing shortage of life-saving drugs such as insulin for diabetes patients even in places like Karachi. Due to non-availability of dollars, the State Bank of Pakistan is not allowing LCs (Letter of Credits), which has led to orders from China, India, the US and Europe being stuck.
8. Pakistan is not able to meet its export targets, and is facing acute trade deficit of $48.66 billion – a 57% jump on back of high-than-expected imports. The trade deficit has reached at an alarming level despite Sharif government banning more than 800 non-essential luxury items.
9. Pakistan’s all-weather friend China is not bailing out the country due to recent security threats and challenges to Chinese and CPEC projects in the region. China is reportedly miffed with Pakistan for “agreeing” to Beijing’s demand to establish military outposts in Balochistan.
10. The UAE has developed strong relationships with India, Israel and the United States to develop geo-economic and strategic cooperation. The recent I2U2 agreement is a big setback for Pakistan, which seems to be losing a strong supporter like Saudi Arabia and UAE due to its security policies in the region.
According to a source in the Pakistan finance ministry, the government has prepared a proposal to restore trade with India, as it seems the only “viable and easy option” to import basics such as vegetables, wheat, rice and medicines after the flash floods fury.
Political and economic experts also feel only India can bail out Pakistan due to easy accessible trade routes such as Wagah-Attari and Khokhrapar-Munabao Borders, the trade proposal stated.
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