CM – The Pakistani Ministry of Finance warns of serious risks to the country’s economy

ISLAMABAD:

Pakistan’s economy is at risk as the rise in international commodity prices could exacerbate inflation and affect balance of payments (BoPs), the country’s Treasury Department said.

Citing the ministry’s statement, The News International reported that « a rise in international commodity prices may continue to put pressure on both domestic inflation and the balance of payments, » adding that government measures, however, are aimed at building strategic reserves, particularly in relation to Food and initiatives to increase exports will definitely reduce the risks involved.

Pakistan’s inflation rate is mainly determined by current and past fiscal and monetary policies, international commodity prices, the USD exchange rate, seasonal factors and economic operators’ expectations regarding the future development of these indicators.

According to the balance of payments (BoP) data, imports of goods and services are expected to level off around $ 6 billion in August 2021 by September, according to The News International.

According to local media, inflation in Pakistan has increased food prices in the country and worsened the conditions of lower-middle-income households.

In a country like Pakistan, where most families spend more than half of their incomes on food, the rising costs of transportation, gasoline, electricity and indirect taxes have raised legitimate concerns about the possible escalation of hunger, poverty and malnutrition, Dawn reported .

While the food price index, which includes five price indices for commodity groups – grains, vegetable oils, sugar, meat and dairy products, pointed to more difficult times for Pakistan, as it shows that global food prices were 31 percent higher in July than a year ago.

But Islamabad’s indifferent view of the problems of low-middle-income families, who are already grappling with significant losses in purchasing power and jobs, has exacerbated the misery of the people.

According to estimates by the World Bank (WB), poverty in Pakistan rose from 4.4 percent to 5.4 percent in 2020, as over two million people fell below the poverty line.

Using the lower middle income poverty rate, the World Bank estimates that the poverty rate in Pakistan was 39.3 percent in 2020-21, and could stay at 39.2 percent in 2021-22 and drop to 37.9 percent by 2022-23, reports The News International

Meanwhile, reports have also indicated that most of the prominent cities in Pakistan lack safe drinking water for citizens, according to data presented to the National Assembly by Imran Khan-led Pakistani government Tehreek-e-Insaf.

While experts said that due to water shortages across the country, Pakistan could face a famine-like situation if the problem is not resolved in a timely manner, Geo News reported. According to the report, water shortages in the country set alarm bells ringing after rivers dried up due to low rainfall.

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