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19 Oct 2008 05:07 pm
Pakistan In Freefall
Fasih Ahmed reports on the situation in Pakistan:
The Zardari government is sailing into a perfect storm of political instability and economic turmoil. The economy is in a virtual freefall. International agencies have slashed its credit ratings. The rupee has hit an all-time low against the dollar. Capital flight is believed to be continuing despite efforts to stop it.
Suicide attacks and kidnappings have led to the repatriation of foreign
skilled labor. The bourses are a blood bath as foreign investors
continue to pull out. Unable to pay its bills, the government has taken
to issuing I.O.U.s to private- and public-sector companies. Overall
inflation is at a punishing 30-year high. Power shortages, the worst in
at least 15 years, are disrupting businesses already hurt by higher
input costs. To top it off, much-needed funding and easier terms
promised by Pakistan’s allies and multilateral donor agencies have yet
to materialize. Foreign-exchange reserves, worth about two months of
imports, are fast running out—and with the worsening economic
situation, so is public patience.
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