Sri Lanka’s crisis rings alarm for other troubled economies, from Lebanon to Pakistan

An investor monitors indexes on the big screen at the Pakistan Stock Exchange (PSE), in Karachi, Pakistan, June 24, 2022. (AP)
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Updated 06 July 2022

Sri Lanka’s crisis rings alarm for other troubled economies, from Lebanon to Pakistan

  • Like Sri Lanka, Pakistan has been in urgent talks with the IMF, hoping to revive a $6 billion bailout package 
  • Soaring crude oil prices pushed up fuel prices which in turn raised other costs, pushing inflation to over 21 percent

BANGKOK: Sri Lanka is desperate for help with weathering its worst crisis in recent memory. Its schools are closed for lack of fuel to get kids and teachers to classrooms. Its effort to arrange a bailout from the International Monetary Fund has been hindered by the severity of its financial crisis, its prime minister says.

But it’s not the only economy that’s in serious trouble as prices of food, fuel and other staples have soared with the war in Ukraine. Alarm bells are ringing for many economies around the world, from Laos and Pakistan to Venezuela and Guinea.

Some 1.6 billion people in 94 countries face at least one dimension of the crisis in food, energy and financial systems, and about 1.2 billion of them live in “perfect-storm” countries, severely vulnerable to a cost-of-living crisis plus other longer-term strains, according to a report last month by the Global Crisis Response Group of the United Nations Secretary-General.

The exact causes for their woes vary, but all share rising risks from surging costs for food and fuel, driven higher by Russia’s war on Ukraine, which hit just as disruptions to tourism and other business activity from the coronavirus pandemic were fading. As a result, the World Bank estimates that per capita incomes in developing economies will be 5 percent below pre-pandemic levels this year.




A daily wage laborer waits for work at a wholesale market in Colombo, Sri Lanka, Sunday, June 26, 2022. (AP)

The economic strains are fueling protests in many countries, as meanwhile, short-term, higher interest borrowing to help finance pandemic relief packages has heaped more debt on countries already struggling to meet repayment obligations. More than half of the world’s poorest countries are in debt distress or at high risk of it, according to the UN.

Some of the worst crises are in countries already devastated by corruption, civil war, coups or other calamities. They muddle along, but with an undue burden of suffering.

Here’s a look at a few of the economies that are in dire straits or at greatest risk.

PAKISTAN

Like Sri Lanka, Pakistan has been in urgent talks with the IMF, hoping to revive a $6 billion bailout package that was put on hold after Prime Minister Imran Khan’s government was ousted in April. Soaring crude oil prices pushed up fuel prices which in turn raised other costs, pushing inflation to over 21 percent. A government minister’s appeal to cut back on tea drinking to reduce the $600 million bill for imported tea angered many Pakistanis. Pakistan’s currency, the rupee, has fallen about 30 percent against the US dollar in the past year. To gain the IMF’s support, Prime Minister Shahbaz Sharif has raised fuel prices, abolished fuel subsidies and imposed a new, 10 percent “super tax” on major industries to help repair the country’s tattered finances. As of late March, Pakistan’s foreign exchange reserves had fallen to $13.5 billion, equivalent to just two months of imports. “Macroeconomic risks are strongly tilted to the downside,” the World Bank warned in its latest assessment.


AFGHANISTAN

Afghanistan has been reeling from a dire economic crisis since the Taliban took control as the US and its NATO allies withdrew their forces last year. Foreign aid — long a mainstay — stopped practically overnight and governments piled on sanctions, halted bank transfers and paralyzed trade, refusing to recognize the Taliban government. The Biden administration froze $7 billion in Afghanistan’s foreign currency reserves held in the United States. About half the country’s 39 million people face life-threatening levels of food insecurity and most civil servants, including doctors, nurses and teachers, have been unpaid for months. A recent earthquake killed more than 1,000 people, adding to those miseries.




A man stands among piles of humanitarian food supplies in Kabul, Afghanistan, Wednesday, Feb. 16, 2022. (AP/FILE)

ARGENTINA

About four of every 10 Argentines are poor and its central bank is running perilously low on foreign reserves as its currency weakens. Inflation is forecast to exceed 70 percent this year. Millions of Argentines survive largely thanks to soup kitchens and state welfare programs, many of which are funneled through politically powerful social movements linked to the ruling party. A recent deal with the IMF to restructure $44 billion in debt faces questions over concessions that critics say will hinder a recovery.

EGYPT

Egypt’s inflation rate surged to almost 15 percent in April, causing privation especially for the nearly one-third of its 103 million people living in poverty. They were already suffering from an ambitious reform program that includes painful austerity measures like floating the national currency and slashing subsidies for fuel, water and electricity. The central bank raised interest rates to curb inflation and devalued the currency, adding to difficulties in repaying Egypt’s sizable foreign debt. Egypt’s net foreign reserves have fallen. Its neighbors Saudi Arabia, Qatar and the United Arab Emirates have pledged $22 billion in deposits and direct investments as assistance.




People crowd a msjor street in Cairo, Egypt, April 14, 2020. (AP/FILE)

LAOS

Tiny, landlocked Laos was one of the fastest growing economies until the pandemic hit. Its debt levels have surged and like Sri Lanka, it is in talks with creditors on how to repay billions of dollars worth of loans. That’s an urgent issue given the country’s weak government finances. Its foreign reserves are equal to less than two months of imports, the World Bank says. A 30 percent depreciation in the Lao currency, the kip, has worsened those woes. Rising prices and job losses due to the pandemic threaten to worsen poverty.

LEBANON

Lebanon shares with Sri Lanka a toxic combination of currency collapse, shortages, punishing levels of inflation and growing hunger, snaking queues for gas and a decimated middle class. It, too, endured a long civil war, its recovery hampered by government dysfunction and terror attacks.




Residents raise their hands as they cross a street during a protest against rising prices of consumer goods and the crash of local currency in Beirut, Lebanon, Monday, Nov. 29, 2021.  (AP/FILE)

Proposed taxes in late 2019 ignited longstanding anger against the ruling class and months of protests. The currency began to sink and Lebanon defaulted on paying back worth about $90 billion at the time, or 170 percent of GDP — one of the highest in the world. In June 2021, with the currency having lost nearly 90 percent of its value, the World Bank said the crisis ranked as one of the worst the world has seen in more than 150 years.

MYANMAR

The pandemic and political instability have buffeted Myanmar’s economy, especially after the army seized power in February 2021 from the elected government of Aung San Suu Kyi. That brought Western sanctions targeting commercial holdings controlled by the army, which dominate the economy. The economy contracted by 18 percent last year and is forecast to barely grow in 2022. More than 700,000 people have fled or been forced from their homes by armed conflicts and political violence. The situation is so uncertain, a recent global economic update from the World Bank excluded forecasts for Myanmar for 2022-2024.

TURKEY

Worsening government finances and a growing trade and capital account deficit have compounded Turkey’s troubles with high and rising debt, inflation — at over 60 percent — and high unemployment. The Central Bank resorted to using foreign reserves to fend off a currency crisis, after the beleaguered lira fell to all-time lows against the US dollar euro in late 2021. Tax cuts and fuel subsidies to cushion the blow from inflation have weakened government finances. Families are struggling to buy food and other goods, while Turkey’s foreign debt is about 54 percent of its GDP, an unsustainable level given the high level of government debt.




A man buys bread in Ulus district of the capital Ankara, Turkey, Thursday, May 5, 2022. (AP/FILE)

ZIMBABWE

Inflation in Zimbabwe has surged to more than 130 percent, raising fears the country could return to the hyperinflation of 2008 that reached 500 billion percent and heaping problems on its already fragile economy. Zimbabwe struggles to generate an adequate inflow of greenbacks needed for its largely dollarized local economy, which has been battered by years of de-industrialization, corruption, low investment, low exports and high debt. Inflation has left Zimbabweans distrustful of the currency, adding to demand for US dollars. And many skip meals as they struggle to make ends meet.


Muslim World League secretary-general arrives in Pakistan 

Updated 05 October 2022

Muslim World League secretary-general arrives in Pakistan 

  • Dr. Muhammad bin Abdul Kareem Al-Issa has been Muslim World League’s secretary-general since 2016
  • Al-Issa will attend the Seerat-un-Nabi Conference as chief guest, says Pakistan’s religion ministry

ISLAMABAD: Muslim World League (MWL) Secretary General Dr. Muhammad bin Abdul Kareem Al-Issa arrived in Pakistan on Wednesday to attend the International Seerat-un-Nabi Conference, Pakistan’s religion ministry said. 

Al-Issa has been the MWL secretary-general since 2016 and has forged several alliances with Jewish, Christian and other religious committees across the world. Prime Minister’s special representative for interfaith harmony, Hafiz Muhammad Tahir Mehmood Ashrafi, earlier said the MWL secretary-general would hold meetings with Pakistan’s prime minister, president, National Assembly speaker and other senior leaders in the country. 

“At the special invitation of Federal Minister for Religious Affairs Mufti Abdul Shakoor, MWL Secretary-General Dr. Muhammad bin Abdul Kareem Al-Issa has arrived in Pakistan,” Pakistan’s Ministry for Religious Affairs and Interfaith Harmony wrote on Twitter. 

“He will attend the Seerat-un-Nabi Conference on Rabiul Awwal 12 as its chief guest,” it added. 

 

Al-Issa was accorded a warm welcome upon arrival at the Nur Khan base in Rawalpindi. Shakoor, Ashrafi and Nawaf bin Said Al-Malki, the Saudi ambassador to Pakistan, received him at the airport with various officials of Pakistan’s religion ministry. 


Asian Development Bank announces $2.3-2.5 billion in flood relief for Pakistan 

Updated 05 October 2022

Asian Development Bank announces $2.3-2.5 billion in flood relief for Pakistan 

  • Almost 1,700 people have been killed in Pakistan in rain-related incidents since June 14 
  • Asian Development Bank delegation meets Finance Minister Ishaq Dar in Islamabad 

ISLAMABAD The Asian Development Bank (ADB) on Wednesday announced it would provide $2.3-2.5 billion in flood relief to support Pakistan, as the South Asian country continues to grapple with devastating floods that it estimates could cost over $30 billion in damages. 

Unusually heavy rains and melting glaciers triggered flash floods across Pakistan since mid-June. Almost 1,700 people have been killed in rain-related incidents since June 14 while millions of houses have been damaged. Critical infrastructure, including bridges and roads, has been severely damaged by raging floods. 

The government has said over 33 million people have been affected by floods, as many Pakistanis displaced by the floods are now suffering from mosquito-borne and water-borne diseases. 

Last month, the ADB said it was working on a “significant relief and rehabilitation package” for people, livelihoods and infrastructure affected by the floods. An ADB delegation led by Country Director Yong Ye met Pakistan’s Finance Minister Ishaq Dar at the Finance Division earlier today, Wednesday. 

“He [Ye] informed the Finance Minister that ADB will provide flood relief support to Pakistan to the tune of $ 2.3 to 2.5 billion including $ 1.5 billion for the BRACE program which will be placed before the ADB Board for approval during this month,” the Finance Division said in a statement. 

The finance minister informed the ADB delegation about the devastation caused by the floods and their impact on Pakistan’s economy, the statement said. Dar thanked ADB for its support and assured the delegation of the government’s full cooperation for “swift execution of the ongoing and future programs.” 

Pakistan has identified several priority needs, including food security, agriculture and livestock, health, water, sanitation, hygiene, shelter, and nonfood items, according to the ADB. 


Pakistan army chief’s US visit reflects both countries’ desire to reset relations — experts 

Updated 05 October 2022

Pakistan army chief’s US visit reflects both countries’ desire to reset relations — experts 

  • General Qamar Javed Bajwa is in Washington on a week-long visit to discuss bilateral ties, regional security 
  • Priority should be deepening ties through deeper economic engagement— international affairs expert 

ISLAMABAD: Pakistan army chief General Qamar Javed Bajwa’s recent trip to Washington after Foreign Minister Bilawal Bhutto-Zardari’s US visit reflects the two countries’ renewed desire to reset strained relations, international affairs and defense experts said on Wednesday. 

Gen Bajwa is in Washington on a week-long visit where he met US defense secretary General Lloyd James Austin III (Retired), national security adviser Jacob Jeremiah Sullivan, and deputy secretary of state Wendy Ruth Sherman. 

According to a statement issued by the Pakistan military’s media wing, during the meetings, both sides had convergence on major international issues including Afghanistan, and the need for cooperation to avoid humanitarian crises and improve peace and stability in the region. 

Washington has worked closely with Pakistan’s army chiefs over the years alongside civilian governments in the South Asian country. 

Uzair Younus, who works with Pakistan Initiative at the Washington-based Atlantic Council, said bilateral relations between the two countries have been improving over the past few months. 

“Gen Bajwa’s trip soon after the foreign minister’s trip to Washington is a good signal for bilateral relations,” Younus told Arab News, adding the visit had been on the cards for months. It had been delayed on a couple of occasions, he said. 

“We must not lose sight of the fact that the relationship remains bounds by a narrow, transactional approach, and deepening ties especially through deeper economic engagement, must be the priority moving forward,” Younus added. 

Ties between Washington and Islamabad were strained with the former suspecting the latter allowed Taliban militants to seek refuge in Pakistan. The relationship between the two countries further soured when former Prime Minister Imran Khan claimed Washington had backed a parliamentary move to oust him from office. 

The US has denied the allegations. 

“The visit is very significant and positive for Pakistan and US relationship because, during Donald Trump’s time and Joe Biden’s initial tenure, the relationship between both countries was almost frozen,” Aizaz Ahmad Chaudhry, a former foreign secretary who also served as Pakistan’s envoy to the USA, told Arab News. 

“As we have ties with the US in every domain and after the visit of prime minister, foreign minister and now military leadership, the trip would generate a positive opinion about bilateral relations,” he said. 

Chaudhry added it did not matter how much time Gen Bajwa has in office before he hangs his boots. 

“The relationship is between institutions which go on with the new leadership in any institution,” Chaudhary added. 

Pentagon announced last month that the US State Department had approved the potential sale of F-16 aircraft sustainment and related equipment to Pakistan in a deal valued at up to $450 million, maintaining that this will improve the South Asian nation’s capability to meet current and future counterterrorism threats. 

Military analyst Ayesha Siddiqa said Bajwa’s visit is significant as both countries were looking to fulfill their needs. She said Pakistan’s army chief could play a vital role to ensure this. 

“This is the restart of a very narrowly focused military conversation with the US military as Pakistan’s military is still critical to the USA to ensure how counterterrorism is managed in the region and also, they did not want to push aggressively Pakistan into the Chinese [camp],” Siddiqa told Arab News. 

Gen Bajwa is set to retire in November. However, Siddiqa said Bajwa could play a significant role in negotiations between the new government post-retirement as well. 

“As after his retirement, General Jahangir Karamat was sent to Washington as an ambassador by the Musharraf government,” she said. “Negotiating and understanding what the Pakistani military is doing could lead to a future role for him.” 

Siddiqa said the visit was a significant one from Pakistan’s perspective as well, adding the South Asian country continues to rely economically and financially on support from western countries. 

She said, therefore, the relationship would remain like a transaction. 

Senior defense analyst Lt Gen (retired) Amjad Shoaib described Bajwa’s visit as a symbolic one, citing the army chief’s retirement next month as the reason for his argument. 

“The visit does not have much importance and is more of symbolic [nature] as Gen Bajwa is retiring next month,” he told Arab News. Shoaib said any decisions that the army chief reaches with the US authorities during his visit would be hard to pursue after his retirement. 

“Gen Bajwa has a very good understanding with the USA in establishing good military-to-military relations during his six-year tenure as army chief,” he said. 

“And they [USA] wanted to honor him to recognize his role in the promotion and strengthening of defense ties, especially during his tenure the Afghan issue was settled and the USA pulled out of it where General Bajwa played an important role,” he added. 

Washington has always supported Pakistan in economic terms but never supported its national interest, especially when it comes to regional issues, Shoaib said. 

“The relations required reorientation through a superior diplomacy,” he added. 


Pakistan’s rupee gains by 0.76% on hopes of IMF relief, declining price of commodities worldwide 

Updated 05 October 2022

Pakistan’s rupee gains by 0.76% on hopes of IMF relief, declining price of commodities worldwide 

  •  Dollar closes at Rs223.94, up by Rs1.70— State Bank of Pakistan 
  • Finance Minister Dar has vowed to bring dollar to under Rs200 

ISLAMABAD: Pakistan’s rupee continued to gain in value against the US dollar on Wednesday, appreciating by 0.76 percent with analysts crediting it mainly to hopes that the country will secure relaxations from the International Monetary Fund (IMF) and declining prices of commodities worldwide. 

Pakistan’s rupee has been on an upward trajectory against the greenback ever since a change in the finance ministry, with former finance minister Miftah Ismail resigning and ruling party senator Ishaq Dar taking his place. 

The greenback closed at Rs223.94 on Wednesday, October 5 with the Pakistani rupee gaining by 0.76 percent, as per figures by the State Bank of Pakistan (SBP). 

“[The rupee gaining value] is due to relaxations that the market expects Pakistan will get from the Asian Development Bank, International Monetary Fund (IMF) and the World Bank due to floods,” Samiullah Tariq, director research at Pakistan Kuwait Investment Company, told Arab News. 

Tariq said prices of international commodities had also decreased in the global market, which had also eased pressure on the rupee. “In my opinion, the [greenback] will come down to the Rs210-215 level in the coming days,” he added. 

He said a “change in sentiment” had also been observed in the currency market since Dar has taken over the finance ministry. 

Earlier this week, Dar said the country’s currency will strengthen to under 200 rupees to the US dollar. He said the rupee would be strengthened through government “policies” as the current rate was inflated due to speculation. 

Dar, who was sworn in last week as finance minister for his fourth stint in the role, has strongly favored intervention in currency markets in the past. 

Khurram Schehzad, CEO of an investment banking and advisory outlet Alpha Beta Core, told Arab News the rupee had gained in value due to “better surveillance” of currency markets by the SBP and the finance ministry. 

However, he warned the rupee may decline in the coming days. 

“Our economy is weak and with the floods, it’s a challenging situation,” Schehzad said. “There are chances of imports rising due to which the rupee may decline again.” 

He said Pakistan’s reserves were low and with the rupee appreciating, Pakistan’s exports may not be sustainable in the long run. Schehzad said the value of the US dollar against other currencies was also on the rise, which could mean the rupee may further weaken in the coming days. 


Sarah Inam’s family says won’t return to Canada without justice in alleged killing by husband

Updated 05 October 2022

Sarah Inam’s family says won’t return to Canada without justice in alleged killing by husband

  • Sarah Inam, 37, was allegedly murdered by husband Shahnawaz Amir last month
  • Family is based in Canada and arrived in Islamabad last week for last rites, to pursue legal case

ISLAMABAD: The father of Sarah Inam, a Pakistani-Canadian who was allegedly beaten to death by her husband last month, said on Wednesday the family would stay in Pakistan until the case was solved, calling on the government and judiciary to dispense speedy justice.

Inam, a 37-year-old economist who worked in Abu Dhabi, was murdered with dumbbells, according to police, by her husband Shahnawaz Amir at a suburban Islamabad home on September 23. Inam got married to Amir of her own choice on July 18 in his hometown of Chakwal. The parents of the couple were not present at the event.

Amir is currently under arrest and being investigated by police.

Inam’s parents and two brothers arrived from Canada and the United States respectively last week to perform Inam’s last rites and pursue the legal case.

“We are still traumatized and shocked, but strongly believe that we will get justice,” Inam Rahim, the victim’s father, told media in Islamabad.

“It was all planned. He [Amir] was a predator from the start, and my daughter was so naive to believe him,” he said, adding that the family would stay in Pakistan to pursue the case till its end.

Rahim said Amir seemed “sensible and convincing” when they had interacted over the phone after the marriage and the family never suspected he was a “beast and killer.”

“We had no negative information about Shahnawaz before the incident,” he said, adding that his daughter informed the family about the marriage over the phone after it was contracted.

“We were planning a formal wedding reception for our daughter in the first week of November,” Rahim said. “It never occurred to us that our daughter, who was a genius and accomplished professional, could be killed like this.”

The father expressed confidence in the police and the investigation process and said he hoped “justice will be served in the minimum possible time.”

The police have so far verified the couple’s nikah, seized a Mercedes car bought by the deceased, and investigated at least five people who attended the couple’s marriage in Chakwal. The police have yet to recover the deceased’s Canadian passport to get exact details of her travel history and have also sought court permission to access the victim and suspect’s bank accounts to investigate accusations of extortion against Amir.

Inam’s murder is reminiscent of last year’s headline-grabbing murder of Noor Mukadam, 27, which drew an outpouring of anger over femicides in the South Asian nation.

In March this year, a Pakistani court sentenced to death Pakistani-American Zahir Jaffer, a childhood friend of Mukadam, for beheading her. Mukadam and Jaffer were widely believed to have been in a romantic relationship, which they had broken off a few months before her murder.

The Islamabad High Court on Wednesday took up appeals in the Mukadam case and regular hearing will start from October 26, which lawyers say would conclude within ten weeks.

Speaking on the occasion, Inam’s brother Farrukh Inam, an employee at a tech company in the US, said his sister had been killed in a “premeditated act,” calling for the culprit to be hanged at the earliest.

“Our lawyer says we have a strong case to plead against the culprit and we’ll take it to the logical conclusion,” he said. “We haven’t been able to sleep peacefully since her murder.”

Inam’s two uncles, aunts and several first cousins were also present at the press conference.

“She was a brilliant, intelligent and kind person,” one of her uncles, Col (retired) Ikram Rahim, said. “She has left a void in our family that can’t be filled.”