In 2023, Pakistan faced the ‘worst economic crisis’ in history: Human Rights Watch

The Human Rights Watch (HRW) in latest World Report 2024 has said that Pakistan faced the worst economic crisis last year, on account of multiple factors including soaring poverty and cost of living.

“With poverty, inflation, and unemployment soaring, Pakistan faced one of the worst economic crises in its history, jeopardizing millions of people’s rights to health, food, and an adequate standard of living,” read the report released on Friday.

It said that in 2023, depreciating local currency, skyrocketing inflation, and the removal of subsidies for electricity and fuel without adequate compensatory measures “made it difficult for many people in Pakistan to realize their economic and social rights”.

During the year, Pakistan’s central bank’s foreign exchange reserves decreased to a historic low of $3 billion in January, an amount covering fewer than three weeks of imports, it said.

In July, Pakistan reached an agreement with the International Monetary Fund (IMF) for $3 billion that mandated the government remove energy and fuel subsidies, move to a market-based exchange rate, and increase taxes.

“This resulted in widespread protests against higher electricity bills, inflation, and food shortages,” read the report.

The HRW was of the view that the insistence of the IMF on austerity and the removal of subsidies without adequate compensatory measures resulted in additional hardship for low-income groups.

Moreover, HRW noted Pakistan remained exceedingly vulnerable to climate change and faced rates of warming considerably above the global average, making extreme climate events more frequent and intense.

It said that the economic crisis came amid the devastating economic cost of the 2022 floods.

“Nearly 37% of Pakistan’s 230 million people faced food insecurity as of 2018, yet only 8.9 million families received assistance to mitigate the impact of rampant inflation.

During the year, Pakistan and China deepened their extensive economic and political ties in 2023, and work continued on the China-Pakistan Economic Corridor, a project consisting of the construction of roads, railways, and energy pipelines, according to the report.