Assignment 2

CONTEMPORARY PAKISTAN
Contemporary Pakistan is marked by a dynamic interplay of various social, political, economic,
and cultural factors. The country has navigated through a range of challenges and opportunities,
shaping its current landscape. Here are some key aspects of the contemporary situation in
Pakistan:

ECONOMIC PROBLEMS OF PAKISTAN

Introduction:
Pakistan faces a myriad of economic challenges that significantly impact the overall development
and well-being of its population. The country grapples with a range of issues that span from fiscal
deficits and high inflation to unemployment and poverty. Understanding the economic landscape
of Pakistan involves delving into various factors that contribute to its complex economic situation.
Fiscal Deficit: Pakistan has struggled with persistent fiscal deficits, where
government expenditures exceed revenues. This situation often leads to the
accumulation of debt and can strain the overall economy.
External Debt and Balance of Payments: Pakistan has a substantial external
debt burden, and managing repayments has been a challenge. The country has
often relied on borrowing, including loans from international institutions, to
meet its financial obligations.
Trade Imbalance: The trade balance has been unfavorable, with imports
exceeding exports. This imbalance can put pressure on foreign exchange
reserves and contribute to the external debt problem.
Inflation: Inflation has been a persistent concern, impacting the purchasing
power of citizens. Rising prices for essential goods and services can pose
challenges for the general population.
Energy Crisis: Pakistan has faced energy shortages and an unreliable power
supply. This not only hampers industrial productivity but also affects the
overall economic growth.
Unemployment: High levels of unemployment and underemployment have
been a long-standing issue. The growing population exacerbates the challenge
of providing sufficient job opportunities.
Security Concerns: Political and security challenges, including regional
tensions, have the potential to impact economic stability and investor
confidence.
Infrastructure: Development: Insufficient infrastructure, including transportation and energy
infrastructure, can impede economic growth and development.
Tax Reforms Tax collection mechanisms and systems needed improvement.
There were challenges in broadening the tax base and ensuring that taxes are
collected efficiently and equitably.
Corruption: Corruption has been a concern in Pakistan and can hinder
economic development by reducing investor confidence and diverting resources
away from productive uses.

Conclusion:
The contemporary economic issues in Pakistan are interconnected with social and political
factors, necessitating a holistic approach to development. Policies that prioritize social welfare,
education, and healthcare can contribute not only to economic growth but also to the well-being
of the population, addressing issues of poverty and inequality.

SOLUTIONS FOR THE ECONOMIC PROBLEMS OF PAKISTAN

Introduction:
Overcoming these economic challenges requires a sustained commitment to good governance,
transparency, and reforms across various sectors. By fostering an environment conducive to
business, investing in human capital, and engaging in constructive international partnerships,
Pakistan can strive towards a more stable and prosperous economic future for its citizens.
Fiscal Deficit: The government needs to focus on fiscal discipline by reducing unnecessary
expenditures and increasing revenue through tax reforms. Efficient management of public finances
and the implementation of austerity measures can help control the fiscal deficit.
External Debt and Balance of Payments: Diversifying the export base, encouraging foreign
direct investment (FDI), and negotiating favorable trade agreements can help improve the balance
of payments. Additionally, prudent debt management strategies and renegotiation of existing debt
terms may be necessary.
Trade Imbalance: Efforts to boost exports through trade
promotion policies, improving the competitiveness of domestic
industries, and investing in technology and innovation can help
address trade imbalances. Enhancing the ease of doing business
can also attract foreign investment.
Inflation: Implementing sound monetary policies, such as
controlling money supply and interest rates, can help manage inflation. Additionally, addressing
structural issues in the economy, such as improving agricultural productivity, can contribute to
price stability.
Energy Crisis: Investment in the energy sector to increase capacity and
improve infrastructure is crucial. Diversification of the energy mix,
including renewable sources, can contribute to a more reliable and
sustainable power supply.
Unemployment: Implementing policies to stimulate economic growth
and attract investment can create job opportunities. Focus on skill
development programs and education can enhance the employability of
the workforce.
Security Concerns: Efforts to address security concerns, both internal and external, can enhance
investor confidence. Diplomatic initiatives to improve regional stability can positively impact
economic conditions.
Infrastructure Development: Prioritizing and investing in infrastructure
projects, such as transportation, energy, and telecommunications, can
boost economic development. Public-private partnerships can also be
explored to fund and manage large-scale infrastructure projects.
Tax Reforms: Implementing comprehensive tax reforms, including
broadening the tax base, simplifying tax structures, and improving tax
administration, can enhance revenue collection. Fair and transparent tax
policies can encourage compliance.
Corruption: Strengthening anti-corruption measures, improving governance, and promoting
transparency in government operations can help address corruption issues. Building strong
institutions and promoting a culture of accountability are crucial in this regard.

Conclusion:
Implementing these solutions requires strong political will, effective governance, and
collaboration between the government, private sector, and civil society. Additionally, a focus on
sustainability and inclusivity is crucial to ensure that economic development benefits all segments
of society.

POLITICAL PROBLEMS OF PAKISTAN

Introduction:
Undoubtedly, political instability has caused great havoc around the globe. It jolts a state
socially, politically, and most importantly, economically. Similarly, Pakistan has faced several
issues because of political instability. Where it hampered the state’s political environment. A few
of them are discussed below:
Political Instability: Frequent changes in government and political instability can hinder long-
term policy implementation and economic development.
Civil-Military Relations: The role of the military in politics and its relationship with civilian
institutions have been areas of concern. Balancing the power dynamics between the military and
civilian government is crucial for democratic stability.
Terrorism and Extremism: Pakistan has faced internal security challenges related to terrorism
and extremism. Addressing these issues requires a comprehensive approach involving military,
intelligence, and social policies.
Ethnic and Sectarian Tensions: Ethnic and sectarian divisions can lead to social unrest.
Managing diversity and promoting inclusivity are essential for national cohesion.
Corruption: Corruption has been a pervasive issue in Pakistan's political landscape. Addressing
corruption is critical for good governance and building public trust in institutions.
Judicial Independence: Ensuring an independent judiciary is important for upholding the rule of
law and protecting citizens' rights. Striking a balance between the executive, legislative, and
judicial branches is crucial.
Electoral Reforms: Improving the electoral process to ensure transparency, fairness, and
inclusivity is essential for strengthening democracy. Reforms in electoral laws and procedures can
contribute to free and fair elections.
Foreign Relations: Managing relationships with neighboring countries and addressing regional
tensions is crucial for regional stability. Balancing diplomatic priorities and addressing
international concerns are ongoing challenges.
Media Freedom: Ensuring freedom of the press and protecting journalists' rights are important
for a vibrant democracy. Balancing media freedom with responsible journalism can be a challenge.
Economic Policy Consensus: Achieving consensus on economic policies among political parties
can be challenging. Economic stability often requires bipartisan support for critical reforms.
Conclusion:
Resolving the political issues in Pakistan demands a collective effort from political leaders,
institutions, and the public. Strengthening democratic institutions, ensuring transparency, and
addressing issues like corruption and civil-military relations are fundamental.

SOLUTIONS FOR THE POLITICAL PROBLEMS OF PAKISTAN

Introduction:
resolving the political issues in Pakistan demands a comprehensive and sustained effort to
strengthen democratic institutions, promote good governance, and address longstanding
challenges. Achieving political stability and fostering a healthy democratic environment requires.
Some of the solutions are discussed below:

Political Instability: Strengthening democratic institutions, ensuring the rule of law, and
promoting a culture of political consensus can help reduce political instability. Transparent and
fair elections contribute to the legitimacy of the government.
Civil-Military Relations: Fostering a healthy civil-military relationship involves respecting the
constitutional roles of each institution. Clearly defined lines of authority and accountability can
help in achieving a balance.
Terrorism and Extremism: Combating terrorism and extremism requires a comprehensive
approach, including intelligence cooperation, military action against militants, social programs to
counter radicalization, and international collaboration.
Ethnic and Sectarian Tensions: Promoting inclusivity, addressing economic disparities among
different regions, and implementing policies that protect the rights of minority groups can help
reduce ethnic and sectarian tensions.
Corruption: Implementing robust anti-corruption measures, strengthening accountability
institutions, and promoting transparency in governance are crucial. The political will to tackle
corruption is essential for success.
Judicial Independence: Upholding and strengthening the independence of the judiciary is vital.
This involves ensuring that judicial appointments are based on merit, protecting judges from
political interference, and promoting judicial reforms.
Electoral Reforms: Improving the electoral process through reforms in electoral laws, enhancing
the independence of the election commission, and implementing measures to prevent rigging can
contribute to free and fair elections.
Foreign Relations: Pursuing a balanced and pragmatic foreign policy, resolving regional conflicts
through dialogue, and engaging in diplomatic initiatives can help in managing foreign relations
effectively.
Media Freedom: Protecting media freedom, ensuring the safety of journalists, and promoting
responsible journalism contribute to a vibrant democratic society. Legislation that safeguards
freedom of the press is crucial.
Economic Policy Consensus: Building consensus among political parties on economic policies
can be achieved through dialogue and compromise. Prioritizing economic stability and sustainable
development over short-term political gains is essential.

Conclusion:
In summary, addressing political issues in Pakistan requires a commitment to democratic
principles, the rule of law, and social justice. It necessitates the active participation of all
stakeholders, including the government, civil society, and the public, to build a resilient political
framework that can withstand challenges and contribute to the overall well-being of the nation.

CURRENT ECONOMIC PROBLEMS IN PAKISTAN

Worst Inflation Rate
Pakistan is experiencing one of the worst inflation rates in its
history. The response by the outgoing Prime Minister Shahbaz
Sharif's Government to the International Monetary Fund's (IMF)
conditions, including the devaluation of the Pakistani rupee and
increases in fuel prices, has exacerbated the situation. Those on
low incomes have been hit the hardest by economic difficulties,
with many experiencing job losses and reduced earnings. As a
result, they have had to cut back on the amount and quality of
food they can afford, seek out less expensive transportation
options, and work multiple jobs to make ends meet.
Financial Mismanagement
Financial mismanagement and political instability, stemming from military interventions, have
further worsened the economic crisis. Much of the deterioration has occurred in the 17 months
following the exit of Imran Khan as Prime Minister.
Increase in Taxes, Bills, and Fuel Prices
IMFs demand to raise sales tax rates, electricity tariffs, and fuel prices have worsened the economic
hardship for people on low incomes and other marginalized populations. Widespread protests
against higher electricity bills have already started across the
country. In a cabinet meeting presided over by Caretaker Prime
Minister Anwaar ul Haq Kakar on Aug 29, 2023, the interim
Government expressed helplessness in proving tariff relief due to
strict IMF conditions. The Human Rights Watch recently urged the
IMF to assess the effect of these adjustments on vulnerable groups
and use anticipated savings to expand social safety nets, and
improve social services and tax collection infrastructure.1 The
health card scheme, a pioneering attempt by Khan towards
universal health coverage, has been blocked in Punjab—Pakistan's
largest province with a population of 110 million people.
Debts
As of December 2022, Pakistan holds external debt and liabilities of $126.3 billion. Nearly 77%
of this debt, amounting to $97.5 billion is directly owed by the government of Pakistan to various
creditors; an additional $7.9 billion is owed by government-controlled public sector enterprises
to multilateral creditors.
Large External Debt
• Pakistan’s large external debt comes with considerable repayment pressure. From April
2023 to June 2026, Pakistan needs to repay $77.5 billion in external debt. For a $350
billion economy, this is a hefty burden. The major repayments in the next three years are
to Chinese financial institutions, private creditors, and Saudi Arabia.
• There is a real danger that nuclear-armed Pakistan with a population of nearly 230 million
people may be unable to meet its external debt obligations — which will trigger a sovereign
default.
Lowest Human Development Index (HDI)
Pakistan’s current GDP, per capita income, and GDP growth are the lowest in its neighborhood;
only war-torn Afghanistan’s economy is weaker. Likewise, its unemployment and inflation rates
are one of the highest in the region. The Human Development Index, which measures a country’s
achievements through three basic dimensions – health, knowledge, and standards of living – placed
Pakistan in the 161st position out of 185 countries in 2022. In other words, Pakistan is among the
25 countries with the lowest human development in the world.

Conclusion:
The country’s current situation has multiple causes, including overall poor economic
management, corruption, and excessive spending on defense and the armed forces. In a country
where half the population is under the age of 22, investing in the education and technical skills of
youth can generate opportunities for a more sustainable economy.

CURRENT POLITICAL PROBLEMS IN PAKISTAN

Imran Khan VS 3 Political Parties Alliance
The current political situation in Pakistan is a result of all that has been happening in Pakistani
politics for the past two years when the three parties in opposition allied against Khan’s elected
government. But we observed rapid changes and developments in April 2022 as the government
elected by the people of the Islamic Republic of Pakistan was taken down by the no-confidence
motion against Imran Khan former Prime Minister. Here’s what prompted the opposition to bring
the no-confidence motion.
Imran Khan and the Betterment for the Country (Foreign Policy)
Khan said he wanted Pakistan to have an independent foreign policy and
good relations with all powers, so he meant Russia, China and the US.
Especially in the last year, Pakistan has moved away from the US, partly
because of the cold shoulder of the Biden administration to Pakistan and
especially to Khan, but part of it is also embracing what we see. In some
ways, Pakistan has visited both countries - China and Russia; Khan
visited the two countries in February. So, despite saying that Pakistan
wants an independent foreign policy, it ended up looking like a Pakistan
with China and Russia in the background of this cold shoulder of the
Biden administration. Since the beginning of his tenure, Khan has done
whatever he thought was the best for his country and his nation without
thinking once about the international pressure that a country like Pakistan
faces whenever it tries to make its own decisions.
Imran Khan’s Time Period and the Problems at that Time
During Khan’s four-year government, Pakistan struggled with high inflation and a weakened
economy. Rising food imports (such as palm oil, which is a major component of ghee) and rising
food inflation due to pulses resulted in rising commodity prices around the world. Rising wheat
prices should be viewed not only from the perspective of urban consumers, but also from the
perspective of rural producers. The sudden spike in the price of the poultry was a result of a
disease, which is now fully recovered. Similarly, rising vegetable prices such as onions and
tomatoes resulted due to the import restrictions with India and the destruction of crops due to
floods last year. The allied opposition otherwise known as PDM presented the motion of no-
confidence, based on the above-mentioned reasons, in the National Assembly. Prime Minister
Imran Khan called for the dissolution of the Pakistan National Assembly and called for new
elections, blocking a no-confidence motion which was threatening to remove him from office
and plunge the country into a constitutional crisis. Opposition lawmakers said they would
challenge the move in the country's highest court, saying it was "unprecedented" and a "grave
violation" of Pakistan's constitution.
National Assembly
As the Assembly’s session began, Khan's expulsion seemed
imminent. Several parties in his coalition abandoned him,
giving the opposition the majority needed to remove him from
office. However, Deputy Speaker Qasim Khan Suri, Khan's
aide, rejected the no-confidence motion. He said Mr. Khan was
still the prime minister and still had the power to dissolve the
assembly. The Pakistani President later confirmed that he had
followed Mr. Khan's instructions. The move came as a surprise to
the opposition.
Opposition Leaders Challenge to Imran Khan in Pakistan Supreme Court

Hours after Prime Minister Imran Khan announced the dissolution of the National Assembly, to
prevent the no-confidence motion from being passed, opposition leaders challenged the move
before the Pakistan Supreme Court. The Supreme Court began hearing the petition and declared
Khan's action illegal and allowed the vote to continue (Masood, 2022). Khan argued that the no-
confidence motion was linked to an American conspiracy and that it violated Article 5 of the
Pakistani Constitution, which defamed the state by emphasizing its allegiance. Their allegation
stems from a private exchange between a senior US official last month and Asad Majeed Khan,
Pakistan's ambassador to Washington; Asad Majeed Khan told Islamabad that a US official had
expressed dissatisfaction with the Prime Minister and that removing him in a no-confidence motion
would improve US-Pakistan relations

PTI Losing Elections

Despite several attempts by the Pakistan Tehreek-e-Insaf government (PTI) to block the no-
confidence motion in the National Assembly, Prime Minister Imran Khan was ousted after losing
the confidence vote ordered by the Supreme Court. In the 342-member House, 174 members voted
in favor of the resolution, while members of the ruling Pakistan Tehreek-e-Insaf (PTI) abstained.

Shahbaz Sharif as PM
After the PTI boycotted the elections and walked out of the
assembly, Shahbaz remained the sole contender for the
PM's job and was subsequently elected the country's chief
executive. After his election, Shahbaz announced several
policy measures as Prime Minister, with a particular focus
on the economy and foreign relations. The next day,
Shahbaz was officially sworn in as the Prime Minister of
Pakistan at a ceremony in Ivan-e-Sadr. Before the
ceremony, President Dr. Arif Alvi complained of
discomfort and was advised to rest for a few days. In the
absence of the President, Senate President Sadiq Sanjarani
administered the oath of office to PM Shahbaz.
Anwar ul Haq Kakar as PM

Due to many problems and riots amongst opposition parties and PTI, there
is no PM. In addition, currently, the Prime Minister of Pakistan is Anwar
ul Haq Kakar who is just temporary and will be removed when the actual
PM is elected through voting. The elections will be held to be on February
2024 where the actual PM will be elected to run the country.

Future Predictions

Economic Growth
The IMF envisions steady growth in real GDP over the next three years, stabilizing around 5% by
FY27. This presents a significant challenge, as our history indicates that whenever our real GDP
surpasses 4%, our current account encounters issues, leading to the need for costly interventions
like interest rate hikes and rupee depreciation.

Inflation or The Consumer Price Index (CPI).

The IMF anticipates Pakistan’s average CPI for FY24 to reach 25.9%, considerably higher than
the government’s estimate of 21%. The IMF attributes this variance to multiple rounds of
devaluations. Average inflation is projected to more than double.

IMF Program
Every time we attempt to take flight, this issue brings us crashing down with shattered hopes. The
importance of staying within the ambit of the IMF program is underscored by this chronic concern.
Our growth in recent spurts has been driven by imports and consumption.
Rupee’s Value
Inflation is backbreaking, the rupee’s value has fallen sharply, and its foreign reserves have now
dropped to the precariously low level of $4.3 billion, enough to cover only one month’s worth of
imports, raising the possibility of default.

Agriculture
The agriculture sector is expected to recover on the back of higher production of important crops,
including cotton and rice. Marginal easing of import restrictions is expected to support some
recovery in the industrial sector, particularly large-scale manufacturing. Flow-on impacts from the
strengthening agriculture and industrial sectors will support a revival in associated services sectors
including wholesale and retail trade, and transport and storage.

Industrial Growth
Industrial growth is forecast to continue decelerating, which reflects fiscal and monetary
tightening, a significant depreciation of the local currency, and higher domestic oil and electricity
prices.

Population Growth
Pakistan too will benefit from population growth. Currently the sixth most populous country (same
6th rank also in 2050), Pakistan’s population will increase from 189 million to 245 million in 2030,
310 million in 2050, and 364 million in 2100.

China
Also, Pakistan’s future depends upon the future of China. China is on the path of becoming a
superpower. If that dream becomes sour, Chinese investment will not be as lucrative as thought.
But if China indeed develops the way it plans, Pakistan will benefit immensely.

Effects of Balance Payments

Headline consumer inflation jumped on higher domestic energy prices, a weaker currency, flood-
related disruptions to supply, and restraint on imports caused by the balance of payment crisis. As
a net importer of oil and gas, Pakistan will continue experiencing strong inflationary pressures.
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