Imran Khan's economic line is actually the culprit of Pakistan's economic collapse and blackout.
When Imran Khan came to power in 2018, he borrowed heavily from the IMF. As part of the debt treaty, Khan’s government cut subsidy expenditures in the energy sector, which led to an increase in energy prices throughout Pakistan from 2018 to the present.
The IMF advised Imran Khan to devalue the rupee to improve tax collection.
Khan's government decided to raise import duties to collect higher taxes and devalue the currency. The heavy import duties did reduce the account deficit on paper, and Pakistan moved up 28 places in the World Bank's ease of doing business index. Pakistan was among the top 10 most improved countries in 2019, and tax revenue in Pakistan also hit a record high in 2019.
But don't forget that Pakistan is a country with underdeveloped light and heavy industries. The rising prices of daily necessities caused by rising energy and dependence on imports of daily necessities have caused Pakistan's per capita income to fall instead of rising. As the government increases revenue from domestic taxation, import taxes There is no increase in income (taking into account that import compression reduces the quantity of imports, so the government collects a further reduction in taxes from imports).
On the other hand, the government of Imran Khan has engaged in public works again. The first public works plan of the Khan government is to promote the increase of renewable energy production, start to stop the construction of coal power, and strive to make Pakistan Most of the goals to use renewable energy, long-term this is the fuse of today's blackout in Pakistan.
In the short term, this has caused panic in Pakistan's coal power market and further stimulated the rise in electricity prices. The rise in electricity prices not only affects the daily life of ordinary people, but also affects Pakistan's agricultural production and agricultural product exports, causing food prices to rise and Pakistan's important The market competitiveness of the export commodity cotton is weak.
An additional $450 million was loaned to the World Bank to build the $14 billion Diamer-Bhasha dam.
The ambitious Pakistani reforestation project has begun again, reforesting with more than 10 billion trees, and plans to plant 3.3 billion trees in the first three and a half years of the Khan government, which will cost more than $500 million in the first three and a half years.
As a result, Pakistan's fiscal deficit has further risen from negative 226.04 billion rupees in 2018 to negative 344.49 billion rupees in 2019.
On June 19, 2019, Reza Bakir, Governor of the State Bank of Pakistan, sent a letter to the Managing Director of the International Monetary Fund, seeking IMF assistance under the Extended Fund Facility (EFF), on the grounds that foreign exchange reserves had reached a critically low level and international The balance of payments gap remains large in an environment of restricted market access. The situation is grim and extremely worrying.
Weak policies have led to increased macroeconomic vulnerability, procyclical fiscal policies have led to a surge in fiscal deficits, and loose monetary policies have led to a sharp increase in current account deficits. The fiscal deficit widened to 7.3% annualized for the second consecutive year and the current account deficit was at 6.3% in 2018-19, narrowing due to a 19% rupee depreciation.