The victor in tomorrow’s elections in Pakistan will inherit a national economy in tatters. There are steep economic challenges ahead—so steep, in fact, that the first stop for Pakistan’s new government will probably be the offices of the IMF, where officials will go to seek a loan to keep the government afloat.
Reuters has the story:
The winner [of tomorrow's election] will inherit a rupee currency that has lost almost 40 percent of its value against the dollar since the last election in 2008, and a fiscal deficit that the ADB thinks will balloon to nearly 8 percent of gross domestic product compared with 5.3 percent two years ago. [...]
Pakistan sells its power for 9 rupees per unit. They cost 12 to produce. The problem is worsened by “line losses”, often a euphemism for influential people refusing to pay bills, that account for around a fifth of total power generated. [...]
Pakistan needs to generate 3 million jobs a year to absorb its growing population. Instead, said [Nadeem Ul] Haque [who was deputy chairman of the government-run Planning Commission], it has been losing about 1 million annually, mostly due to the power crisis.
Pitifully weak tax collection is another cause of the gaping hole in Pakistan’s finances.
The IMF wants Pakistan to broaden its tax base, yet under the PPP government tax compliance fell to a point where only around 0.5 percent of Pakistanis paid income tax.
Read the whole thing. It doesn’t paint a pretty picture for Pakistan’s immediate future, regardless of the outcome of tomorrow’s “peaceful”, “democratic” election.
[Imran Khan image courtesy of Wikimedia Commons]