Pakistan PM Shehbaz Sharif today said that his government will have to agree to IMF conditions for bailout. But what led to Pakistan’s worsening economic crisis, its IMF ‘addiction’ & political, economic blunders? Watch ThePrint Editor-In-Chief Shekhar Gupta explain, in episode 1167 of #CutTheClutter. We also look at some of the key takeaways from a conversation between economist Atif Mian & former finance minister Miftah Ismail, by Brookings Institution. Link:
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Discussion by Brookings Centre for Middle East Policy:

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Political & Economic Blunders in Pakistan’s Worsening Economic Crisis Even as IMF Finalises Bailout

Pakistan’s economy has been in turmoil for quite some time now, with the country facing a deepening economic crisis. As the International Monetary Fund (IMF) finalises a bailout package for the country, it is essential to understand the political and economic blunders that have led to this dire situation.

One of the main reasons for Pakistan’s worsening economic crisis is the lack of sound economic policies and governance. Pakistan’s economy has been marred by a lack of structural reforms, corruption, inefficiency, and mismanagement. The government’s failure to address these issues has led to a significant decline in economic growth and a sharp increase in inflation and unemployment.

Furthermore, Pakistan’s political instability has also played a significant role in aggravating the economic crisis. Frequent changes in government, political unrest, and a lack of consensus on economic policies have created uncertainty and deterred foreign investment, which is crucial for economic growth.

Another major blunder that has contributed to the worsening economic crisis is the unsustainable borrowing and spending by successive governments. Pakistan’s reliance on external borrowing to finance its budget deficit has led to a significant increase in public debt, putting immense pressure on the country’s fiscal outlook.

Moreover, the lack of focus on improving tax collection and broadening the tax base has further exacerbated the economic crisis. The country’s tax-to-GDP ratio is one of the lowest in the world, and the rampant tax evasion has deprived the government of much-needed revenue, forcing it to rely on borrowing to meet its expenditures.

The energy crisis in Pakistan is yet another critical factor that has contributed to the economic turmoil. The lack of affordable and reliable energy has hindered industrial growth, leading to job losses and a decline in productivity. This, in turn, has had a detrimental effect on the overall economy.

As the IMF finalises a bailout package for Pakistan, it is essential for the government to acknowledge and address these political and economic blunders. Structural reforms, improved governance, and efforts to enhance tax collection and broaden the tax base are crucial steps that must be taken to stabilize the economy.

Furthermore, the government must focus on addressing the energy crisis and attracting foreign investment to spur economic growth. Political stability and consensus on economic policies are also essential to restore confidence in the economy and attract much-needed investment.

In conclusion, Pakistan’s economic crisis is a result of a combination of political and economic blunders that have been allowed to persist for far too long. As the IMF finalises a bailout for the country, it is crucial for the government to implement comprehensive reforms and policies to address these issues and pave the way for sustainable economic growth and stability. Failure to do so will only prolong the country’s economic turmoil and further deepen the crisis.