BLOODBATH AT ECONOMIC FRONT AS POLITICAL UNCERTAINTY PREVAILS

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FILE PHOTO: The Fitch Ratings logo is seen at their offices at Canary Wharf financial district in London,Britain, March 3, 2016. REUTERS/Reinhard Krause/File Photo

Since April 11, Pakistan’s economy is still in turmoil and Shahbaz Sharif-led government is completely failed in managing the economic affairs. Since the ouster of former Prime Minister Imran Khan from PM office through a controversial vote of no-confidence, the new coalition government has worsened the economic situation.
Rupee’s depreciation continues as the rupee’s value hits all-time low and the dollar gains more strength. As per the State Bank of Pakistan, today Rupee closed at 221.99 which is the highest dollar rate ever since 1947.
The Stock Exchange also witnessed a meltdown and the PSX 100 index lost 1053 points and then recovered a bit and closed at 40,389. Since April 11, PSX has lost 5,746 points and the US dollar rate is up by PKR 39.
International rating agency Fitch also changed Pakistan’s outlook status from stable to negative. As per the rating agency’s press release, the main reason behind the negative status is a weak coalition government and political uncertainty. “Renewed political volatility cannot be excluded and could undermine the authorities’ fiscal and external adjustment, as happened in early 2022 and 2018, particularly in the current environment of slowing growth and high inflation. The new government is supported by a disparate coalition of parties with only a slim majority in parliament. Regular elections are due in October 2023, creating the risk of policy slippage after the conclusion of the IMF programme.” reads the official statement. Fitch’s statement further added that “The Revision of the Outlook to Negative reflects significant deterioration in Pakistan’s external liquidity position and financing conditions since early 2022. We assume IMF board approval of Pakistan’s new staff-level agreement with the IMF, but see considerable risks to its implementation and to continued access to financing after the programme’s expiry in June 2023 in a tough economic and political climate.”