Coronavirus: Economic Challenges Facing Pakistan

Coronavirus: Economic Challenges Facing Pakistan

The number of people infected with the coronavirus in Akstan is increasing day by day. Although the government has taken timely precautions and security measures, the death toll from the virus is much lower than in other countries, but the reality is that the lockdown that has been going on for weeks in most parts of the country The economy has been hit hard. About 19 million people have lost their jobs due to closure of various industries and restrictions on transportation, 70% of whom are from Punjab province.

Among those most affected by the lockdown restrictions are employees of small and medium-sized enterprises, businesses and companies (SMEs) and hard-working daily wage earners. The government has allocated Rs 144 billion under the Ehsas Emergency Cash Program to provide financial assistance to the unemployed. The amount will be distributed to more than 80 million people in phases. The Ehsas program is undoubtedly a welcome step. However, this is not a permanent solution to the problem. The government's first priority should be to stabilize the economy in the light of various economic indicators.

According to a recent report by the Asian Development Bank, Pakistan's economic growth rate was 3.3 percent in 2019, which has slowed to 2.6 percent in 2020 due to the spread of the corona virus. If the lockdown continues with the same intensity, the Pakistani economy will face a deficit of Rs 2.5 trillion in the next three months. The truth is that a country of 220 million people cannot afford a long-term lockdown because of the abundance of problems, scarcity of resources and extreme poverty.

According to the State Bank of Pakistan, in February 2020, the total internal and external debt of the federal government was touching a staggering level of Rs. 33 trillion and Rs. 421 billion. The lethality of the corona virus has left developed countries chewing gum. Pakistan's economy, which is largely dependent on debt, is in dire straits.

The United States is the world's largest spender on health, spending 17% of its GDP on health care and patient care in other Western countries. Allocated for Unfortunately, Pakistan's healthcare sector is in a state of disarray due to a lack of investment and decades of government inattention.

The government of Pakistan spends only 2 to 3% of its annual GDP on the health sector, despite its large population and inability to afford treatment. Europe and the United States are also suffering from a shortage of protective equipment (PPE) due to the rapid spread of the coronavirus. The Government of Pakistan should ensure that medicines and medical devices and facilities such as masks, protective clothing and ventilators are manufactured locally in accordance with international standards. This will not only make Pakistan self-sufficient in its medical and health-related needs, but also create countless employment opportunities. The healthcare sector requires specialized education, skills and expertise. The quality of education of the people will also be raised and their skills will be burnt.

The SBP has slashed interest rates from 11 per cent to 9 per cent a few weeks ago to boost the economy and protect exports in the current situation. In many developed countries such as Germany, France, Spain and Sweden, the interest rate is 0%. From an economic point of view, the lower the interest rate, the higher the investment, the more new jobs will be opened and the more wealth the people will have. With more cash than necessary, people will buy valuables and houses, etc. As their demand increases, prices will go up and the financial position of those who already own these expensive and sophisticated items will become more stable. The SBP should further reduce interest rates to restore investor confidence and stabilize the economy.