Pakistan: Alarming Number Of COVID-19 Confirmed Cases Draining Economy – OpEd

The Johns Hopkins University reports that the novel coronavirus has spread to 180 countries (including territories). So far there are over 859,000 confirmed cases, 42,321 have died and 178,000 have recovered. According to Bloomberg, Italy has been worst hit by the virus as the death toll crossed the 12,000 marks. The government was about to end its tight lockdown on Friday (April, 03), but has decided to continue until Easter Sunday (April, 12). Although Italy has been hard hit by coronavirus, the lockdown is helping to bring down the number of deaths, as 1,648 have died on Monday against 3.815 of the day before. Countries like Italy and recently Jordan and India are confident that the following strict lockdown (or curfew) will decrease the spread of coronavirus.

On the contrary, on 30th March, Prime Minister Imran Khan addressed the nation for the third time since March, 17. Each time the PM reiterated that the country can not afford a complete lockdown or curfew of Italy or Indian kind to control the spread of the virus. He endorsed that declaring countrywide lockdown is solely to defend the economic interests of the poor segment of the society. The incumbent PM assumed the office on 18 August 2018 and the receding economy became the first test of his premiership. Khan’s affective diplomacy brought friendly loans from Gulf countries and China. After months of deadlock with the IMF, Pakistan secured its 21st bailout package. Since July 2019 Pakistan started to receive package installments which will last over 38 months.

While the lethal epidemic has spread across the world, how could a country like Pakistan avoid it? Since its first case on 26 February, Pakistan has witnessed a steep rise in coronavirus cases. Till today (01, April) 2,119 cases have been recorded as the death toll 26, just 150 cases have been confirmed with in the last 24 hours. Like, almost all of the affected countries, as bordered with Iran and China, Pakistan has imported the coronavirus carriers from outside the borders. According to the Asia Pacific, 80% of the cases had recently returned from Iran and Saudi Arabia. When the country had just 15 cases, Sindh Chief Minister Murad Ali Shah claims that a weak screening system at Taftan Border (with Iran) and Jinnah International Airport (country’s largest airport) immensely contributed to the spread of the virus in the country. So far the province of Punjab has recorded the highest number of cases i.e. 740. The government of Punjab has announced Rs10 billion relief fund on Monday. Similarly, the Kyber Pakhtunkhwa (253) government has allocated Rs11.4 billion, from which 1.9 million people will get financial benefits. The second most affected province is Sindh, with 706 confirmed cases.

Unlike other affected countries, although the novel pandemic has not caused many deaths it is already bringing the economy to its knees. Almost all of the development project has been put to a halt, foreign investment has been slashed, and the finances which have been gathered from the IMF and friendly countries to put the economy on track, are now consumed to fight against the pandemic. In this regard, to avoid any decline in economic, the government has been delaying a complete lockdown as nearly 40% of the population is already subjected as lower middle class, which depends mostly on daily wages to run their houses. A complete lockdown or curfew of India or Jordan kind can collapse the already strained economy and starved the major chunk of the country’s population. In the context of total lockdown or curfew, during the March, 17 address, the PM said “if we save the people from coronavirus, they’ll die of hunger” (Al Jazeera). Furthermore, the majority of the country’s population is middle class. The Business Insider indicates that the middle class comprised 43% between 2001-02, which dropped to 38% by 2015- 16. Amid the current partial lockdown, as declared by the Federal Government and complete lockdown in by the provincial government of Sindh and Kyber Pakhtunkhwa, the remaining middle class can further drop down to the lower middle class.

The increase in the number of cases in Pakistan is alarming as it is much higher than Italy and as Pakistan has had struggled with its transparency, the total number can be much higher than the reported cases. The government has refused to declare a complete lockdown or state curfew, to secure the interest of daily wagers and lower-income families. But the partial lockdown in parts of the country is already affecting the underprivileged segment of the society. To compensate the unemployment and control poverty, which has been considered a greater threat to the nation as compared to the epidemic itself, the government has announced a national relief package of $6 billion, which includes $1.26 billion aid for laborers and daily wage earners to help their families during the pandemic. Furthermore, a huge percentage of the package comprises of several subsidies on main commodities like gasoline (15 Rupee/0.10$), wheat, sugar, and pulses. Such relief package may counter the growing poverty owing to unemployment but it is going to drain the national financial resources. The fund is about 10% of the GDP. A country of projected GDP below 3%, allocating relief package of $6 billion may help the poor families during partial lockdown but the burden on the financial resources of the country will bring the country back to where it stood before the release of $6 billion bailout package from IMF. As the partial lockdown period extends, the finances needed to feed the nation would also increase, which the country can not afford. Pakistan Institute of Development Economics (PIDE) published a paper “Sectoral Analysis of the Vulnerable Employed COVID-19 and Pakistan’s Labor Market” which explains that to keep the curve flat, the financial cost would increase exponentially. Furthermore, if the situation persists, Pakistan can face zero growth from low economic growth which will significantly reduce the tax collection in 2020.

Moreover, the national rupee is facing constant devaluation against the US dollar since the lockdown in parts of the country. The day (February, 26) when the first corona case was reported, the dollar stood 153.08 PRs which took a hike and reached a record high to 166.24 PRs (Trending Economies). The numbers are so uncertain that in the third week of March, the currency devalued 7 PRs in one week. There are two stories linked to the devaluation, one explains that the currency has devalued because the State Bank of Pakistan has lowered the interest rate for the second time in a week from 13.25 to 11%. While economic analyst, Muhammad Sohail stated that drastic unbalance in demand and supply and limited or almost no economic activities have contributed to the sharp devaluation of Pakistani rupee against the dollar.

Although the relief package and available finances from the IMF have come in time to support and save the economic and social sector from total collapse. The constant increase in the number of cases, growing unemployment, and persistent devaluation can bring down the health sector and collapsed the socio-economic pattern of the country. In such a scenario, the only focus of the government has to reduce and ultimately halt the growing number of cases.