As a result, there is no solid economic plan and hence Pakistani economy has also been unstable. But in the last few years it’s problems have increased due to many reasons.

Due to the covid pandemic, Russia Ukraine war and political instability, the inflation rate reached a record high of 38% in May 2023, and was approximately 30% as of January 2024 which has made it hard for many Pakistanis, especially poorer households, to make ends meet.

Pakistan also imports a lot of its food and fuel, leading to a constant decline in it’s forex reserves. Foreign currency reserves have fallen to as low as $4 billion in June 2023 which was not enough to support even a month’s worth of imports.

Currently, Pakistan has an absolute external debt of $125 billion, The bulk of this debt is owed to China which gave loans to Pakistan for Infrastructure projects. Pakistan may not even know that it is under Chinese debt trap.

Pakistan’s economic crisis is also due to it’s failure in tax collections. According to an American report, Pakistan is one of the world’s worst performers on tax collection. The government fears taxing powerful businesses who are backed by the military. Due to the lack of tax revenues there are not enough funds to modernise economy or repay loans on time, which has led to increased borrowing and debt.

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