Former finance minister Dr. Hafiz Pasha cautioned on Tuesday that if Pakistan experiences a default, inflation could surge to 70%.
Pasha predicted that severe stagflation would probably continue to plague Pakistan’s overall economy in 2023. Members of the Pakistan Industrial and Traders Associations Front were in attendance (PIAF).
Even if the loan from the international lender is reinstated, inflation will still rise to at least 35% due to the International Monetary Fund’s (IMF) strict standards.
“If the government implements the key reforms agreed with the IMF, including a Rs50 levy per litre on POL, an electricity tariff hike of 40 per cent, doubling of the gas tariff, and shift to market-based exchange rate policy, the inflation rate could exceed 35 per cent,” warned Pasha.
If the administration doesn’t carry out the agreed-upon reforms, the IMF programme will be terminated, effectively drying up the nation’s financial resources.
Pakistan’s reliance on expensive foreign loans, in Pasha’s opinion, has been disastrous. In the first 65 years, the country owed $65 billion in debt. This sum rose to almost $130 billion over the course of the next seven years as we increased our reliance on pricey loans with high interest rates.