Pakistan would fall into recession for the first time in 68 years due to the devastating impact of the virus, says World Bank
SoDATA — Pakistan has sought $3.9 billion from international lending agencies in the wake of economic slowdown — frontended by the coronavirus pandemic, which observers say is putting the cash-trapped and debt-ridden PM Khan-led government in a dire strait.
Khan’s PTI government had already announced Rs1.2 trillion fiscal stimulus package to offset the adverse impacts of the COVID-19 pandemic on the country’s fragile economy.
Shortfall in tax collection has further added woes to the mix as the country enters fourth week of lockdown and social distancing.
The International Monetary Fund (IMF) on April 16 is expected to consider an extra loan of $1.4 billion to boost the country’s foreign exchange reserves and extend budgetary support. The request for the low-cost, fast-disbursing loan under the fund’s Rapid Financing Instrument (RFI) is additional to the country’s $6 billion loan package that it signed with the IMF in July last year to stave off a balance of payments crisis.
The World Bank has approved $1 billion and the Asian Development Bank $1.5 billion for the country to keep its economy afloat. This happened last month, according to a source.
In a report released on Sunday, the World Bank has anticipated Pakistan would fall into recession for the first time in 68 years due to the devastating impact of the virus. The global lender expected the economy to shrink and suffer a painful decline in per capita income.
Meanwhile, Khan on Monday appealed to overseas Pakistanis (nearly 10m with highest concentration in GCC countries) to donate “generously to the PM Relief Fund” for COVID-19 to cope with the challenge.
“The lockdown has adversely affected the world economy, including Pakistan, resulting in growing poverty across the globe,” said the prime minister.
He added that in the wake of growing economic difficulties, the country needs more money in the relief fund and urged overseas Pakistanis should come forward to contribute in this regard.
On Monday, the Stock index dived 1,000 points with investors remaining wary about economic fallout of coronavirus in the country. The country’s top court has also taken suo moto notice of the overall situation, saying Khan’s cabinet has become ineffective in the fight against the pandemic.
Expressing dismay over his government’s performance to control coronavirus, the apex court noted that there is a lack of leadership that could maintain unity in the country.