Besides skyrocketing food prices and record-breaking inflation, frequent and prolonged power cuts, and long lines at the petrol station, Pakistanis are now struggling to get proper healthcare as hospitals are running short of essential medicines and supplies.
‘Worst medicine crisis’
The lack of forex reserves in the country has affected Pakistan’s capacity to import the required medicines or the active pharmaceutical ingredients used in domestic production. As a result, local pharmaceutical manufacturers have been forced to slash their production as patients suffer in hospitals.
As per local media reports, many operation theatres are left with less than two-week stock of anaesthetics needed for sensitive surgeries. Doctors have been forced to not perform surgeries due to the shortage of drugs and medical equipment.
Pakistan’s medicine manufacturing sector is highly import-dependent with almost 95% of the drugs requiring raw materials from other nations, including India and China. For most of the drug manufacturers, the imported materials have been held up at the Karachi port due to a shortage of dollars in the banking system.
Pakistan currently has a foreign exchange reserve of just $3.5 billion and commercial banks are not issuing new Letters of Credit for imports.
“The worst medicine crisis could erupt in the country if current policies [ban on imports] remain in place for the next four to five weeks,” said a report by The Express Tribune quoting Pakistan Pharmaceutical Manufacturers’ Association central chairman Syed Farooq Bukhari.
Weekly inflation at over 40%
Meanwhile, consumer prices rose significantly in the outgoing week on the back of onions, chicken, eggs, rice, cigarettes and fuel, official data showed on Friday, driving the weekly inflation to over 40% for the first time in over five months, as per a report by Dawn.
Though week-on-week inflation eased slightly, it still remained high as bananas, chicken, sugar, cooking oil, gas and cigarettes became costlier, the Pakistan Bureau of Statistics reported.
The headline inflation measured by the Consumer Price Index (CPI) was recorded at 27.6% in January. However, the government has been taking strict measures under IMF conditions that are likely to further cool the economy and stoke inflation.
Struggling to implement IMF conditions
Meanwhile, the Sharif government on Sunday agreed to increase the policy interest rate, which stands at 17%, by 200 basis points to 19% — just below the previous record of 19.5% set in October 1996.
With the new decision, Pakistan has accepted another pre-condition of the IMF for the release of $1.1 billion in critical funding, a part of the $6.5 billion bailout package. A report by The Express Tribune stated that the interest rate was hiked based on rates the government set in the auction to raise domestic debt.
Pakistan has been struggling to meet the tough conditions set by the global financier — specially since an election is due by the end of the year and the government is reluctant to be too harsh in case it is punished at the polls.
Earlier this month, the Pakistan government and the IMF staff concluded the ninth review of the $6.5 billion bailout package without a staff-level agreement.
Since then the Sharif government has been scrambling to adhere to the IMF’s riders for bailout.
In order to stave off bankruptcy and debt default, the crisis-ridden country has already removed artificial caps on its currency resulting in it shedding more than a quarter of its value; fuel prices have jumped by almost a fifth and are expected to rise further; key policy rate has been hiked; and taxes on luxury items have been increased. Pakistan’s government has also issued guidelines to save energy costs, including closing all malls and markets by 8.30pm.
Pakistan has ordered its foreign ministry to slash the number of missions abroad, reduce staff and initiate other measures to cut down expenditures by 15%. All departments have also been told to slash their spending by 15%.
Power, gas sectors next?
Despite the severe measures taken already, Pakistan officials said the global financier is still negotiating with Islamabad over power sector debt.
Consumers will likely have to brace for another hike in electricity tariff with officials stating that the government has been left with no other option but to receive additional payment from consumers to retire the power sector debt.
Moreover, gas price adjustments and immediate removal of subsidies for industrial consumers are also set to be modified as the government desperately attempts to meet the IMF’s demands.