ISLAMABAD: Pakistan is reeling under a severe dollar liquidity crunch while the recent flash floods have aggravated the macroeconomic fundamentals despite resumption of the IMF programme after a pause of seven months.
Pakistan has yet to make a fresh request to the IMF for a Rapid Financing Instrument (RFI) or disaster relief facility, expecting a tepid response from the Washington-based international lender. The IMF program, worth less than $6.5 billion, was revived in late August after it stalled in February 2022 under the PTI-led government when it provided unfunded subsidies for fuel and electricity. .
Now as a result of the severe floods, preliminary estimated losses have accumulated in the range of $18 billion, Pakistan’s agriculture sector has been hit the hardest as the agricultural growth rate could remain at zero or against the current projected target of 3.9 percent. Can fall into the negative. Financial year 2022-23
The poor performance of the agricultural sector will put pressure on the growing demand for commodity imports and if Pakistan fails to generate the desired level of dollar inflows, it could lead to food shortages in the current fiscal year. “Without improving dollar injection, Pakistan’s economic weaknesses are not going anywhere.
The situation has become more dire as the demand for imports has increased manifold but the country does not have enough dollars. So the overall exchange rate has come under a lot of pressure in recent times as a result of which the rupee has depreciated by 9 per cent against the US dollar,” a top government source told The News on Friday.
According to an estimate, Pakistan will have to import an additional $2 billion worth of cotton during the current fiscal year as it affected areas of Sindh where cotton production was completely destroyed. Now the government has to dewater the areas where wheat has been sown, otherwise the production is likely to decrease by 3 to 5 million tonnes. Minor crops of onion and tomato were also damaged in KP and Sindh. The import demand of pulses may also increase in the current financial year. Another problem may emerge on the trade front as domestic exports are also dependent on imports of raw materials and intermediate goods as value addition was done for the export of finished products.
