Pakistan’s inflation hits a new high of 36.4%, surpassing even Sri Lanka’s

In April, Pakistan experienced a surge in year-on-year inflation, reaching a historic high of 36.4%, which is currently the highest inflation rate in Asia. This puts Pakistan’s inflation rate higher than that of Sri Lanka, which dropped from 50.3% in March to 35.3% in April due to bankruptcy. Pakistan has been struggling to avoid default and secure a bailout package from the IMF, and the record-high inflation is attributed to a combination of factors, including a weaker currency, skyrocketing food prices, and increasing energy costs.

The finance ministry of Pakistan predicts that inflation will continue to hover around 36-38%, primarily because of the depreciation of the Pakistani rupee and the escalating prices of goods, which have contributed to the overall rise in prices. The Pakistani rupee is currently one of the worst-performing currencies globally, having depreciated by 20% against the dollar in 2023.

According to the data, transportation prices increased by 56.8 percent and food inflation rose by 48.1 percent in April compared to the same month in the previous year. Meanwhile, Sri Lanka experienced a decrease in food inflation from 47.6 percent in March to 30.6 percent in April, and non-food inflation declined from 51.7 percent in March 2023 to 37.6 percent.

What’s the situation as compared to Sri Lanka?

The situation in Pakistan is worse than that of Sri Lanka, and many people in the troubled country are now blaming Finance Minister Ishaq Dar and Prime Minister Shehbaz Sharif for the worsening crisis at home.

The current government led by PM Shehbaz Sharif was criticized by former Pakistan Prime Minister Imran Khan for the high inflation rate of 12.6% during the vote of no confidence last year. In a recent statement, Khan highlighted that Pakistan’s inflation rate has now surpassed Sri Lanka to become Asia’s fastest. He accused the current “imported government” of oppressing the masses, particularly the salaried class, with the highest inflation rate in the country’s history.

Khan also pointed out the irony of the government’s claim to bring about a regime change to control inflation, which has resulted in granting National Reconciliation Ordinances (NROs) for their money laundering and corruption while undermining the economy and violating the Constitution and laws, allowing the law of the jungle to prevail in Pakistan today.

The National Reconciliation Ordinance (NRO), a controversial law that granted amnesty to politicians, bureaucrats, and other public officials accused of corruption, embezzlement, and other crimes committed between January 1, 1986, and October 12, 1999, was the subject of Khan’s reference.

Regarding the report on high inflation, Vishal Sehgal, a Twitter user, opined that Finance Minister Dar and PM Sharif seemed unconcerned about the economy, as they were preoccupied with battling Imran Khan, who was pushing for an early election. “However, do Ishaq Dar or his leader CM Shehbaz exhibit any concern? Absolutely not! They are too preoccupied with their ongoing battles with the judiciary or #ImranKhan. #Pakistan currently has the fastest rising prices in #Asia, even surpassing #SriLanka, where inflation reached 35.3% in April,” he wrote.

Former Pakistan finance minister Miftah Ismail recently stated that Pakistan is currently facing unsustainable high debt, and will not be able to overcome this challenge without increasing tax revenue and implementing structural reforms. Speaking at the ‘Reimagining Pakistan’ event, Ismail emphasized the gravity of the situation, stating that Pakistan’s long-term unsustainable deficit is hindering its progress.

Ismail pointed out that even if the government were to double or triple the current tax structure, it would not be sufficient to tackle the crisis. He stressed that until Pakistan increases its tax-to-GDP ratio by 15 percent and export-to-GDP ratio by 15 percent, the country will continue to face challenges. According to Ismail, Pakistan must pay $25 billion annually, which is causing lower growth and further complications. He predicted that Pakistan will remain in this predicament for the next two years and will require another IMF program.

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