Economical causes of poverty
Economical Downturn
Experiencing a worsening trade deficit, Pakistan now has to deal with a difficult external accounts state. After a huge improvement in balance of payments on account of large disbursements, amounting to around $8 billion in 2009 and 2010 from the International Monetary Fund (IMF), external deficits have moved into the danger zone. Pakistan has now ended its partnership with the IMF. (Burki, 2012)
Assessing the current situation, the downturn of the previous 4 years will likely remain. GDP will increase at at most 2%, and 6-7 million more Pakistanis will sink into poverty.(Burki, 2012)
The government in Islamabad, which is mainly controlled by the Pakistan People's Party, is caught up in disagreements with the military and with a judiciary that is becoming more authoritative. Diplomatic ties with the United States weakening and the economic aid that had been agreed on to be a constant $1.5 billion annually from 2009 to 2014 has been cut off. This is mainly due to the dissatisfaction of the White House about the Pakistani army not taking any actions to combat the rebels operating from the tribal parts of Pakistan that border Afghanistan.(Burki, 2012)
In a similar situation over the last few months, capital inflows – both private and official – started dwindling steeply and foreign currency stocks began diminishing because of heavy debt payments. By July 12, 2013, liquid reserves plunged to 5.5 billion dollars, barely sufficient to cover the import bill of about five weeks. The depletion in reserves brought enormous pressure on the exchange rate with the central bank having to pump 250 million dollars a month in the market to prop up the rupee since October 2012. (Jamal, 2013)
Average Earnings Per Day
The average earning per day in 2011-12 was $1,256.8 per capita for 178.91 million population.
Large Scale Import
Pakistan imports more than it exports. Annually, high costs are incurred from importing goods. Importing even raw materials for industries further worsens the financial burden. Thus, decreasing the amount of goods imported and building supply chains from Pakistan’s abundant natural resources is crucial to create more jobs and give Pakistanis chances to increase their income. (Aftab, Sameer, Malik and Zehra, n.d.)
Experiencing a worsening trade deficit, Pakistan now has to deal with a difficult external accounts state. After a huge improvement in balance of payments on account of large disbursements, amounting to around $8 billion in 2009 and 2010 from the International Monetary Fund (IMF), external deficits have moved into the danger zone. Pakistan has now ended its partnership with the IMF. (Burki, 2012)
Assessing the current situation, the downturn of the previous 4 years will likely remain. GDP will increase at at most 2%, and 6-7 million more Pakistanis will sink into poverty.(Burki, 2012)
The government in Islamabad, which is mainly controlled by the Pakistan People's Party, is caught up in disagreements with the military and with a judiciary that is becoming more authoritative. Diplomatic ties with the United States weakening and the economic aid that had been agreed on to be a constant $1.5 billion annually from 2009 to 2014 has been cut off. This is mainly due to the dissatisfaction of the White House about the Pakistani army not taking any actions to combat the rebels operating from the tribal parts of Pakistan that border Afghanistan.(Burki, 2012)
In a similar situation over the last few months, capital inflows – both private and official – started dwindling steeply and foreign currency stocks began diminishing because of heavy debt payments. By July 12, 2013, liquid reserves plunged to 5.5 billion dollars, barely sufficient to cover the import bill of about five weeks. The depletion in reserves brought enormous pressure on the exchange rate with the central bank having to pump 250 million dollars a month in the market to prop up the rupee since October 2012. (Jamal, 2013)
Average Earnings Per Day
The average earning per day in 2011-12 was $1,256.8 per capita for 178.91 million population.
Large Scale Import
Pakistan imports more than it exports. Annually, high costs are incurred from importing goods. Importing even raw materials for industries further worsens the financial burden. Thus, decreasing the amount of goods imported and building supply chains from Pakistan’s abundant natural resources is crucial to create more jobs and give Pakistanis chances to increase their income. (Aftab, Sameer, Malik and Zehra, n.d.)