New Delhi: Post the humiliating ouster of former Prime Minister Imran Khan & the devastating floods, Pakistan has been battered by series of crisis – ranging from sinking economy, political instability and now the downgraded ratings by rating agencies.
The beleaguered country got a fresh lease of life after the ignominy of staying in Financial Action Task Force (FATF)’s grey list got lifted out recently but the mounting list of challenges threaten not just to derail its recovery but push it in further turmoil.
Pakistan’s economy remains under extreme stress, with many comparing it to sinking ship, its ratings have been downgraded, bonds are devalued, foreign reserves are at abyss and burden of payments looms large on its head.
All this combined with political chaos makes its highly untenable for Pakistan to stay afloat. The struggling economy of Pakistan is not stabilizing despite regime change and the recent warning to the country form rating agencies that it must take hard measures to avoid economic default comes as another setback.
Global rating agency Fitch recently cut Pak’s sovereign credit rating from ‘B-‘ to ‘CCC+’, citing drop in its liquidity & foreign reserves.
Just days ago, the globally renowned economist Steve Hanke in his searing observation said that Shehbaz government is failing to save the ‘sinking ship’.
“Pakistan’s sovereign bonds have lost more than 60% of their value this year. I’m not surprised,” Steve Hanie tweeted.
Not just Fitch, many global rating agencies have painted a grim picture of Pakistan’s economy. Not long ago, Moody’s downgraded Pakistan and cut its sovereign credit rating to Caa1 from B3, which is bordering on a default.
According to World Bank estimate, Pak’s economy is likely to grow at a meager 2.2% unlike earlier when it saw 6% growth. Its weekly inflation also stands at staggering 27.13%.
Amidst all the gloom, Pak PM is likely to visit China, its all-weather friend to help it tide over the crisis. The country may be hoping to receive billions for meeting the cash crunch and help bridge the trade deficit but experts are not bullish about it.
According to financial experts, Pakistan is also likely to miss its target of remittances this year.
The devastating floods in Pakistan this year not only wreaked havoc across the country but also ravaged its economy beyond repair. Pakistan is hoping to recover from the catastrophic floods by arranging international donors’ conference but all this may go in vain, given the severity of economic debt & crisis it finds itself enmeshed in.