From Asia Times, May 16:
Foreign exchange reserves are falling, food inflation is spiraling and the rupee has been on a slippery slope
Taking its cue from Sri Lanka, Pakistan is heading toward bankruptcy amid a highly charged political atmosphere marked by threats of a march on the capital Islamabad by the ousted prime minister, who is demanding fresh elections in the country by May 20.
The political instability, analysts fear, may turn violent in the coming days, affecting Pakistan’s reeling economy, which has been headed toward a default-like situation.
The country’s foreign exchange reserves are falling, food inflation is spiraling and the Pakistani rupee is on slippery ground, showing a massive 21.72% drop during the current financial year.
Economic experts and analysts have been demanding a financial emergency to deal with the looming economic challenges. They suggest that Rs.800 billion (US$4.1 billion) tax exemptions available to the corporate sector be withdrawn and higher taxes be levied on land and property holdings.
They also want cuts to non-combat defense spending, a special emergency tax on vehicles of 1600cc or more, doubling the electricity tariff on residential properties of 800 square yards or more and downsizing federal government departments.
“The pressure on the rupee is mounting due to receding dollar inflows and a lack of support from friendly countries including China, Saudi Arabia and the United Arab Emirates (UAE),” Farrukh Saleem, an Islamabad-based Pakistani political scientist, economist and financial analyst, told Asia Times.
....MUCH MORE
