By: Zara Asad
Pakistan has been one of the worst hit by COVID-19, as the economic crisis caused by the epidemic exacerbates an already existing problem.
Prior to the outbreak of COVID-19, the Pakistani economy struggled to stay afloat but was not in danger of collapsing. While almost all nations are severely affected by the global health crisis, the Pakistani economy does not have the capacity to experience the major disruptions caused by the epidemic. Last month, Pakistan’s National Department of Health warned border officials and health facilities to be on the lookout for any suspected cases. Towards the end of February, a possible catastrophic growth in Pakistan could occur. The material disruption from China caused other sources to increase prices, and Pakistani manufacturers began to feel a little out of place. Fabrics, which make up about 60 percent of Pakistan’s exports, rely on China for 70 percent of their imports. Suddenly, the cost of importing from China increased by 100 percent. With Pakistan blocking all trade with India, the only remaining resources were South Korea and Taiwan, which also increased prices by 30–35 percent.
Even before COVID-19, economic activity in Pakistan declined so much that the government was unable to collect the PKR 5.5 trillion tax it had set. The target was reduced to PKR 5.2 trillion in December 2019, and reached PKR 4.8 trillion in February 2020. After COVID-19, the IMF agreed that Pakistan would only be able to collect PKR 3.9 trillion by FY20, PKR shortages 1.6 trillion. In addition, the latest target of PKR 3.9 trillion means that in the last three financial years, namely FY18, FY19 and FY20, the revenue collected by Pakistan’s FBR remains almost the same.
Pakistan should translate the tragic crisis of COVID-19 into an opportunity for change in its economic, political, and foreign policy and security policy. If it fails, the country will face the prospect of further deterioration in its economy. Increasing poverty and unemployment will exacerbate political and social unrest; this, in turn, could undermine the government and threaten any of the democratic progress Pakistan has made so far.