The United Arab Emirates (UAE) has agreed to extend a $2 billion loan to Pakistan along with an additional $1 billion to help the cash-starved nation tackle its economic mess. Prime Minister Shehbaz Sharif's office made this announcement after meeting with UAE President Sheikh Mohammaed bin Zayed Al-Nahyan in Abu Dhabi.
Sharif is on a two-day visit to the UAE aimed at ramping up bilateral economic and trade ties, just a few days after the country's powerful Army chief General Asim Munir concluded his trip to the Gulf emirate.
My visit to the UAE is aimed at building on the conversation I have had with H.H. President Sheikh @MohamedBinZayed. We share a resolve & understanding that the continuous efforts need to be made to further strengthen trade, investment & economic relations.— Shehbaz Sharif (@CMShehbaz) January 12, 2023
The visit comes at a time when Pakistan's foreign reserves have plummeted to an 8-year low with $5.8 billion, and the country doesn't have sufficient reserves even to import goods for more than a month. The situation has worsened for the poor especially, as many regions like Khyber Paktunkhwa, Sindh and Balochistan have run out of wheat flour which is distributed by the government at subsidised rates.
Since the banks have stopped issuing letters of credit, retirement of documents is delayed and lifting up of imported wheat from Russia is further delayed, which has aggravated the woes of Pakistan. People are standing up in long queues to procure wheat, which makes for the staple diet of Pakistan.
Cooking oil, ghee, chicken all expensive: It is reported that cooking oil and ghee are in short supply in Pakistan as traders have been running out of stocks. The lifting up of 3,58,000 tonnes of edible oil from customs-bonded warehouses has been suspended because the banks have been turning down the requests for opening LCs.
Crumbling economy: The economic woes of Pakistan intensified after the floods last year, which had submerged more than one-third of Pakistan under water. The floods not only claimed the lives of 1,700 people, it caused economic devastation worth Rs 30 billion.
Pakistan's inflation is forecast to stay between 21-23% and the country's fiscal deficit is widening by more than 115% in the first four months (July-October) of the current fiscal year.