Pakistan economic crisis: Foreign ministry asked to cut down number of missions abroad, reduce offices

KEY HIGHLIGHTS:

• Pakistan PM Shehbaz Sharif has directed to cut the number of foreign missions
• The country has formed an austerity committee, and issued a number of measures
• China Development Bank has approved a loan facility of $700 mn for Pakistan

Pakistan Prime Minister Shehbaz Sharif has instructed the Ministry of Foreign Affairs to cut the number of foreign missions and reduce their offices amid an unprecedented economic crisis in the country. PM Sharif issued a number of measures amid reports of a comprehensive austerity drive. 

Pakistani media has reported that PM Sharif asked the Foreign Office to cut their foreign missions, reduce offices, staff and other measures as they aim to cut down expenses by 15 per cent. 

A directive by the PMO stated that the prime minister directed a well-considered proposal in this regard to be submitted to his office within two weeks. The official communique titled ‘Rationalisation of Foreign Mission Abroad’ stated due to the need for fiscal consolidation and control of external deficit, a National Austerity Committee would be formed. The committee suggested cutting the expenditure of Pakistani missions by 15 per cent. 

PAKISTAN ECONOMIC CRISIS: AUSTERITY MEASURES

Pakistani media suggested that there has been increasing frustration amid the political-cum-technocratic members of the cabinet over the government’s reluctance to implement the measures issued by the NAC. The media reported that while the government is taking measures such as hiking electricity and gas tariffs, it is not cutting down wasteful expenditures. 

CHINA’S ASSISTANCE

Pakistani Finance Minister Ishaq Dar announced on Wednesday that the board of China Development Bank (CDB) has approved a loan facility of $700 million for Pakistan. He said that the formalities have been completed. 

“Formalities completed and the Board of China Development Bank has approved the facility of US $700 million for Pakistan. This amount is expected to be received this week by the State Bank of Pakistan which will shore up its forex reserves!” he announced on social media.

PAKISTAN’S FOREX

Pakistan’s foreign exchange reserves dropped to around $3 billion, which is barely enough to sustain three weeks of controlled imports, the media reported. The country, meanwhile, is also holding virtual talks with International Monetary Fund (IMF) for an economic bailout.  

Finance Minister Dar sounded optimistic earlier and stated that the country’s foreign reserves situation would be “much better than you can think” by end-June. 

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