As the recent economic crisis of Pakistan heads to nations grid failure, the scenario of pasts Sri- Lanka’s financial situation is coming up as fear for the people of Pakistan.The whole national grid system crashed on Jan. 23 at 7:34 am, sending Pakistan into an early night.Invading Pakistan required a torch, according to Indian Prime Minister Narendra Modi.Because their pumps were moving by electricity, they said some residents of Peshawar, a city of more than 2.3 million, lacked access to potable water.
Fahad Rauf, the head of research at Karachi-based brokerage Ismail Iqbal Industries, stated, "We have been increasing capacity, but we have been doing so without enhancing transmission infrastructure.Large portions of the nation were affected by the outage..Because their pumps were moving by electricity, they said some residents of Peshawar, a city of more than 2.3 million, lacked access to potable water. Although telecom firms and several of hospitals claimed to have shifted to backup generators, outages persisted.The power outage is causing a lot of trouble for me, said Mohammad Khurram, a resident of Karachi who was visiting his ill mother-in-law in a local hospital. "The X-ray equipment and other testing devices are affected, so I have to constantly taking her in and out of the facility."As a result, Pakistan's installed power generation capacity was 43,775 megawatts last year. The total was 26,683 thermal (controlled by the private sector), and 10,635 megawatts were hydroelectric (under the Water and Power Development Authority's control).
Also, 26,683 megawatts of this total 1,838 megawatts were generated by wind, 530 megawatts by solar, 369 megawatts by bagasse, and 3,620 megawatts by nuclear power.After the most recent significant outage in October, it took hours to restore power. The 220 million residents of Pakistan frequently experience blackouts, which a senior ministry official attributed to the grid's aging infrastructure.
The official wished to remain anonymous because they weren't authorized to speak to the media.They said, "There is an inherent flaw in the system." Transmission lines need to be longer and more adequate, and generators come across as distant from the load centers. Pakistan's grid requires an overhaul, just like much of the country's infrastructure, but the government claims it cannot afford to do so.
Apart from this, the economy of Pakistan is on the edge of failing. Pakistan faces a potential loan default due to its 25% inflation rate, 255 rupees to the dollar market rate, and declining foreign exchange reserves of around $3.5 billion. t's in dire need of outside funding to supplement. It also depletes reserves of $10 billion, as promised by international contributors.However, nobody will go forward until the $6 billion IMF bailout deal that was signed in 2019 is implemented. The IMF has pushed for stringent conditions and asked that structural imbalances in the economy be corrected.
Due to its failure to produce earnings, Pakistan's economy has relied heavily on foreign help. Akmal Hussain, one of Pakistan's top economists, has stated that Pakistan's reliance on foreign aid is due to the economy's fundamental structure, which has been "formed by successive elite-based, rent-seeking regimes in Pakistan's history."
The only option for the government is to agree to the conditions to get the money, build up its foreign exchange reserves, and pay off external debt.But this will only offer temporary comfort without addressing any of the underlying issues in an economy that isn't to balance its expenditures and revenues. For debt repayment in the upcoming fiscal year, $30 billion must require.Pakistan's consumption-led, import-heavy growth model is an unsustainable one that has the nation mired in a never-ending cycle of borrowing. The alleged IMF bailout package will only result in increased debt for Pakistan. For debt repayment in the upcoming fiscal year, $30 billion must require.
The forecast for the upcoming several years isn't promising.MF bailouts can only be a temporary fix. It’s necessary to increase tax collections, but this is easier said than done. The world's lowest tax-to-GDP ratio is in Pakistan. More importantly, can the military economy be changed? 25% of the federal budget is allocated to defence. The many foundations administered by the military generate $26.5 billion in revenue annually, or approximately 10% of the GDP, but they do not pay taxes. The government faces a formidable challenge in addressing the declining foreign exchange reserves, rising debt, and expanding trade imbalance. The challenging task of increasing exports, luring remittances, and producing taxes lie ahead.
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