Usama Mughal
Pakistan is reeling under galloping and snowballing economic duress these days as the current account deficit continues to surge along with inflation-storm and regrettably the exchange rate is below the unrelenting overstressed, however, the casual way in which this situation is described as a “financial crisis” in our discourse needs to halt. The stresses are there, and they are growing horrendously, and the country is unable to dodge the need for resumption of the IMF program at the earliest, but nothing happening today can be described as a “financial crisis”. For a clearer idea of what a financial crisis really looks like we should take a look at countries like Kazakhstan, Turkey or Lebanon. All of these countries have witnessed social pandemonium and turmoil and downturn of the economic growth to the great deal where day to day life of the citizens is colossally impacted. In Lebanon,to illustrate— the government doubled the exchange rate for dollar withdrawals from foreign currency accounts overnight, sending charged mobs into bank branches clamouring to withdraw their holdings fearing a freezing of the accounts. The black market rate for dollars reached 20 times the official rate. Inflation hit 174 percent in October with no clue of abating and subsiding. Mammoth paucity of fuel and medicines exit everywhere since the country imports 80 percent of its requisite and vital supplies and providing. According to an estimate, 77,000 people have fled the country as refugees over the last year as the crisis began to enhance, with the disgruntled country struggled to reach concordant with the IMF for a bailout. This is what a financial crisis looks like. The riots in Kazakhstan may well have been long in the making, but they were stimulated and triggered by the removal of a price cap on LPG that had become a fuel of choice for many citizens as oil prices spiked. The cap dismal swiftly doubled the price but the government argued they had no choice since the cap was leading to shortages. The snowballing intensity of the frigid riots was so severe as to actuate an appeal for assistance from immediate regions, leading to a swift and immediate deployment of “Russian battalion” to put down the avoidable disturbances and chaos. This is what a financial crisis looks like…
