Pakistan receives $700 million from China

February 25, 2023

The foreign exchange reserves of Pakistan fell to 2.9 billion USD. It is now slowly rising to 4 billion USD. The cash injection was the need of the moment for Pakistan. And China stepped in offering 700 million USD to help its “all-weather” friend. China Development Bank transferred the funds to Pakistan State Bank. Pakistan was also asking for help from the IMF. Unfortunately, the talks ended in failure. IMF is planning on sending 1.1 billion USD but no decision has been made yet.

Why is Pakistan in Economic Crisis?

Taxes are increasing in the country; oil prices are shooting up rapidly, the rupee value of the country is falling, etc. Pakistan is facing an economic crisis because of ill-planned tax reforms. Another reason is the weak regulatory system.

What should Pakistan do?

The country should introduce structural reforms and economic reforms. Also, Pakistan should try and bring in investments. When it comes to trade, the country should remove the bias. Public finances should be strengthened; the energy sector reformation, removing biasing non-agricultural sector and strengthening competition law.

In what areas did Pakistan fail?

Any country should give equal importance to the private sector. In the same way, the private sector should not be prioritized. The right balance should be maintained between the public and private sectors.

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