Pakistan, meaning the land of the spiritually pure and clean, is, alas effectively skint.

Ten thousand containers sit at ports unless payment is received, industry has no power for production, and an agricultural state is now importing food..if it can afford to.

A macroeconomic meltdown is underway with all the conventional smoke signals: a collapsing economy, rising inflation of 30%, a run on the currency (thus making imports more expensive for locals), depleting reserves (less than the cost of a decent Premier League side …ie shy of $3bn), fuel and now food shortages, with the staple chapati flour in short supply.

Wages arrears threaten food security, health outcomes have worsened with malaria on the rise, education attainment is appalling, and literacy rates are barely over 50%.

Successive failure of policy since independence in 1947 has led to this outcome – IMF bailouts, Arab largesse, US dollars to keep the Taliban at bay, Chinese mercantilism of late –  none of it has stalled the longer-term trend towards a failing state. The risks of a Sri Lankan-style total collapse are now real, even if there is a short-term sugar rush of IMF support and additional Gulf financing.

Pakistan’s population is 10 times larger than Sri Lanka’s 22m, its economy worth $350bn, 4 times larger. Similarities include a history of poor governance, populist governments happy to run fiscal deficits and recent Chinese capture through heavily conditional lending for infrastructure, most notably the China-Pakistan Economic Corridor from Kashgar in NE China to Gwadar on the Indian Ocean. 

Pakistan’s socio-economic collapse should ring alarm bells, even next door to India. Pakistan has nukes and borders an even more basket case in Afghanistan that chooses to nurture a medieval male-dominated system of government and exports terrorism and 80% of the world’s opium. 

Pakistan resembles Egypt in the political and economic role of the military. The Jasmine Revolution, Arab Spring et al. began on the economic tail of the 2008-09 global crisis. Pakistan could face the same scenario…and an arc of instability from Iran, and Afghanistan to Pakistan.

And oh, Pakistan faces mammoth climate risks. It is home to more glaciers than any other country, melting as temperatures hit 50 degrees in the summer. A third of the country was flooded in 2022, and the heatwave decimated agricultural yields.

Short-term economic fixes are sticking-plaster solutions, but I suspect that’s what will happen. The government will likely follow the spend-less, tax-more IMF message and get a couple of billion dollars, enough to ride out a few months…until the next crisis, probably later this year. However, this macro-fiscal support will not trickle down to the masses, and the risk of a Sri Lankan-style mass protest fuelled by Islamist extremism becomes ever more likely.

* Dr Rupinder Singh advises governments and multilateral organisations on public finance, budget support and aid systems — a career spanning 80 countries from the Baltics, Ukraine and the former Soviet Union to Sub-Saharan Africa and Asia. His clients have included the World Bank, EBRD, Asian Development Bank, Agence Française de Développement, OECD, UNDP and European Union.