2023, the year of crisis for Pakistan's economy, politics and security | 5 takeaways
Pakistani rupee hit an all-time low, crossing the PKR 300 mark against the US dollar in August 2023. The country's foreign reserves with the State Bank of Pakistan (SPB) also dropped to an alarming level — at $3.1 billion in January 2023. The cash-strapped country struggled to unlock funding from the International Monetary Fund (IMF).
In a bid to secure one, the SBP hiked interest rate by 300 basis points (bps) to 20 per cent — the highest level since October 1996. The country introduced taxes after raising gas and electricity prices. Pakistan Consumer Price Index (CPI) growth reached an all-time high of 38.0 per cent YoY in May 2023, as per the CEIC database.
It was measured at 26.9 per cent YoY in October 2023, compared with a rate of 31.4 per cent in September. The inflation rose so much so that a litre of milk was being sold at over ₹200 in Pakistan. In a bid to tackle inflation, a free flour scheme was launched in Pakistan, especially for the poor in the Punjab province under the Ramzan package.
Around April-March, a deadly stampede in Pakistan's Karachi killed over 10 people at a free food distribution centre in Pakistan's Karachi. Pakistan finally reached a staff-level agreement with the IMF on a $3 billion "nine-month Stand-by Arrangement (SBA)". The executive board of the IMF will finally meet on January 11, 2024, to consider the final approval to hand out to Pakistan the next $700 million tranche of its loan program.
The crisis in Pakistan's political arena was no less than the economic one. In May 2023, the country saw the arrest of a key political leader — Imran Khan, the cricketer-turned-political and former Pakistan Prime Minister. He was accused of corruption, unlawfully selling gifts from foreign
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