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Pakistan‘s economic crisis has deepened over the past few years, with inflation soaring above 30%, causing widespread suffering and desperation among its citizens. The country’s GDP, per capita income, and GDP growth are the lowest in the region, with only war-torn Afghanistan faring worse. The Human Development Index ranks Pakistan 161st out of 185 countries, placing it among the 25 countries with the lowest human development in the world.

Contributing Factors

The root causes of Pakistan’s economic predicament include poor economic management, corruption, excessive spending on defence and the armed forces, and the burden of foreign loans. Moreover, recent catastrophic floods have damaged agricultural land and infrastructure, while the war in Ukraine has disrupted grain supply and contributed to rising food prices. Additionally, Pakistan’s declining currency value has led to higher tariffs on imported oil, a key source of energy for the country.

The Role of China and CPEC

China‘s involvement in Pakistan’s economy, particularly through the China-Pakistan Economic Corridor (CPEC), has been both a boon and a burden. While CPEC holds the promise of long-term economic growth for Pakistan, the high-interest loans from China have contributed to the nation’s debt crisis. As of December 2022, Pakistan’s external debt and liabilities stood at $126.3 billion, with 30% owed to China.

The Road to Recovery

To address the current economic crisis, Pakistan must focus on transparency in government spending and a restructuring of its economy. This includes reducing excessive defence spending and reliance on foreign debt, while investing in education and skills development for its young population. Furthermore, the government should explore alternative sources of funding for infrastructure projects, such as the CPEC, to reduce the burden of high-interest loans.

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