It is an open secret that US financial crisis spread globally and Pakistan is also the one is affected by this financial crunch. It is a challenging situation for this elected Government to stabilize a huge current account deficit and decreasing foreign exchange reserves that is becoming dangerously low level within a few months. The new ruling govt. obviously has no plan based on its resources and capability to follow. They tend to look outward for assistance.
Critical situation
Pakistan is facing a two fold situation in this crucial timing, first the economic crisis which some people wrongly associate with the global financial crisis, which had its origin in the US and secondly a warfare situation in the homeland i-e so called war against terror .
International efforts are under way to stop Pakistan from defaulting on its debts after its foreign reserves dropped to just $3bn. With about $1bn a month needed to provide its people the basic requirements. There are threats that Pakistan could run out of money before the end of the year.
Friends
The first option is Friend of Pakistan consortium which included Britain, France, Germany, US, China, UAE, Canada, Turkey, Australia and Italy plus the UN and the European Union could come up with a relief package even if they desire so. All these nations are mixed up in a financial crisis which demands a state-sponsored relief package for Pakistan.
Hopes from China Saudi Arabia
Pakistan President Asif Ali Zardari held a trip to China on Tuesday. Pakistan has seen China as its most reliable friend, in contrast to the US. What is unusual is the context, because of the financial crisis all hopes comes to end when china don’t give a positive response as Pakistan’s govt. It had been hoping for assistance from longtime ally China, but President Asif Ali Zardari returned from Beijing last Friday without any commitment of cash. Another traditional ally, Saudi Arabia, has refused to provide financial concessions on oil exports to Pakistan.
IMF and World bank
As ‘friends’ and China did not come forward, they moved on to other plans. Pakistan and the IMF have agreed on an additional fiscal space of 0.8 to 1.2% of (GDP) in the next budget 2009-10. But the on very tight conditions that to remove subsidies on food and fuel which will be a bad news for Pakistan population.
The World Bank will also provide 1.4 billion-dollar support for the country during the next nine months. The amount will be released after approval from the bank’s board. According to World Bank’s sources, the amount can be invested only in some specific projects.
But all of this Pakistan should depend on his resources which are God-gifted but should be managed properly with skilled manpower and stop begging from west which is always have their interests.
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