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Summaiya Syed Tariq is a surgeon in Karachi. In recent months, she has taken to social media to expose the immense human cost of Pakistan’s economic crisis. Dr Tariq has documented several cases of suicide that she attributes to the desperation felt by Pakistan’s poorest amidst economic instability.

In a particularly jarring account, Dr Tariq said that she had “received [the] dead body of a minor baby girl along with her father, mother, and sister in critical condition at Abbasi Shaheed Hospital. History as provided suggests the wilful ingestion of “Neela Thota” (Copper Sulphate) by the parents after giving the same to the kids. The cause was given as joblessness and inability to make ends meet. This is in the midst of Karachi […] if true, speaks of our collective apathy. [I] Can’t even begin to imagine the helplessness of a family who sought refuge in death.”

"As with Sri Lanka, many of Pakistan’s problems relate to the fact that the country is running unsustainable levels of debt"

Such tragedies are disturbingly common as Pakistan confronts an increasingly serious economic situation.

In April, 13 people were killed in a crush among people waiting for Ramadan food donations, with media reports that “the crowd crush is the latest in a string of deadly incidents at food distribution centres across Pakistan as citizens struggle with soaring inflation and rising costs of basic necessities.”

Pakistani citizens have been badly hit by drastically rising inflation, which has recently hit a of 35.4%. This can partly be attributed to Russia’s invasion of Ukraine, which has significantly increased prices for essential goods, including , in the region and around the world. Pakistan has been particularly exposed to rising prices globally as it is a consumption society that relies on imports from external markets.

While the trade deficit has recently, Pakistan is still running a significant deficit of around 400 million Pakistani rupees a month. Given that this is coming at a time when the currency is rapidly, having lost of its value against the US dollar in the last year alone, Pakistan has experienced much worse levels of inflation than its peers. Indeed, prices are rising in Pakistan at a rate than any other country in Asia. Inflation is now worse in Pakistan than in Sri Lanka, which last year suffered an that many fear Pakistan could replicate.

As with Sri Lanka, many of Pakistan’s problems relate to the fact that the country is running unsustainable levels of debt. Islamabad’s external debt and liabilities at over $126 billion in December. This debt has become more difficult to service in the last year because most major economies around the world have moved to hike interest rates, making repayments more expensive.

Further, external debt tends to be denominated in US dollars and the greenback has performed on foreign exchange markets since 2020. This also serves to make debt repayments relatively more expensive. Other countries in the wider region, including Egypt, have experienced similar difficulties as a result of these dynamics.

There are rising fears that Pakistan may default on this debt. High debt repayments and a widening trade deficit mean that Pakistan has dwindling foreign reserves. The State Bank of Pakistan, the country’s central bank, announced in December that its foreign exchange reserves to just $6.7 billion, a four-year low.

While the reserves have increased slightly since then, there is still a serious risk that Pakistan could end up defaulting. In February, the global rating agency Moody cut Pakistan’s sovereign credit rating by two notches and that the country’s liquidity issues “significantly raise default risks.”

A default would tarnish Pakistan’s reputation in the eyes of international creditors and make it significantly more expensive for Islamabad to access cash on capital markets. In turn, this would make it harder for the government to continue its current levels of spending and provide state services.

There is a sense in Pakistan that multiple crises have converged at once. Aside from the serious economic situation, last year the country saw unprecedented flooding that killed over 1,700 people and displaced almost 8 million"

The Pakistani government has been engaged in talks with the International Monetary Fund (IMF) over a that would help Pakistan meet its financial commitments.

In 2019, Pakistan signed a $6 billion deal with the IMF, with another $1 billion added a year later. However, the IMF has refused to release the first $1.1 billion payment until the organisation receives assurances that Pakistan’s international allies are prepared to assist.

Ishaq Dar, Pakistan’s Finance Minister, recently that he had secured the support of the authorities in the United Arab Emirates (UAE), which suggests that the funds could be on their way to Islamabad soon. This should be enough for the country to avoid the worst possible economic consequences but will arguably leave the fundamentals of Pakistan’s economic problems untouched.

There is a sense in Pakistan that multiple crises have converged at once. Aside from the serious economic situation, last year the country saw that killed over 1,700 people and displaced almost 8 million.

Islamabad remains embroiled in political turmoil since the in former prime minister Imran Khan in April 2022, which saw him replaced by Shehbaz Sharif. There has been in the capital city and elsewhere, particularly after the arrest of Khan earlier this month.

Elections will take place later this year, with opinion polls that Khan’s Pakistan Tehreek-e-Insaf (TEK) could be the largest party. Tensions are likely to increase further as polling day approaches.

As Dr Tariq on an almost daily basis, this economic and political instability is having a very real impact on the Pakistani people. The World Bank now that over 37% of the Pakistani population will be in poverty this year, with “a difficult macroeconomic environment […] leading to a decline in household incomes and further poverty reduction.”

Only time will tell whether Pakistan is past the worse of its economic turmoil, or whether more difficulties are in store. The signs are not particularly positive for Islamabad, even with an IMF package on the horizon. Continued economic turbulence will come with an ever-higher human cost.

Harry Clynch is Features Editor at Disruption Banking. He writes on politics, international affairs and international markets. His words have appeared in The Spectator, UnHerd and others.Ěý

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