The number of cases arising out of corona virus in Pakistan continues to rise steadily. As of April 14, 2020 there were well over 5000 cases (5,716) and deaths arising out of the virus were 96. China is providing assistance to Pakistan in dealing with the virus, and apart from medical assistance in the form of materials (including ventilators, masks, test kits, protective clothes) , a team of medical experts reached Pakistan on March 28,2020 for a period of two weeks. The team of Chinese medical experts argued for the extension of the lockdown in Pakistan (especially the province of Punjab which has been hardest hit by the epidemic), arguing that one of the factors which helped China in controlling the further spread of the outbreak was the lockdown.
While the Chinese delegation laid great emphasis on extending the lockdown, and greater ‘social distancing’, one of the major challenges for the Pakistan PM, Imran Khan has been the state of the Pakistan economy. It is for this reason, that he was reluctant to go in for a lockdown, eventually pressure from opposition parties (the province of Sindh went for a lockdown even before the Federal Government) and more importantly according to some from the Pakistan army was what finally compelled the Pakistan PM to go in for the lockdown.
On April 12, 2020 in an appeal, on social media, to the international community, United Nations Secretary General and International financial institutions, Khan appealed for ‘debt relief’ to developing countries. Khan also pointed to the fact that the challenges faced by developing and developed countries were markedly different. Said the Pakistan PM:
“While in the developed world, the main dilemma is containing with the coronavirus through lockdowns and then dealing with the economic impact, in the developing world, apart from containing the virus and dealing with the economic crisis, our biggest worry now is people dying of hunger.”
He also pointed to the need for an initiative with a thrust on ‘Global Debt Relief’, where all stakeholders are brought on board for coming up with a well thought out economic and health response to the pandemic.
Welfare measures by the government
As the number of cases has been rising continuously, Khan has warned people to take the necessary precautions, saying that the country’s hospitals may not be able to cope up with the rising number of cases. The Pakistan PM who had earlier announced a stimulus package (to the tune of Rupees 1.2 Trillion Pakistan) to provide relief to labourers, businessmen as well as the middle class also stated, that the government would start distributing cash to poor families through a program, ‘Ehsas Emergency Cash Program’. According to this program, Rs. 144 Billion (Pakistani) would be distributed amongst 12 Million low income families.
While Chinese assistance to Pakistan has been drawing attention, with both countries laying emphasis on the point that the bilateral relationship is an all weather one and that the ‘Pakistan-China All-weather Strategic Cooperative Partnership’ had grown under the leadership of Chinese President Xi Jinping and Pakistani PM, Imran Khan. Pakistan Foreign Minister, Shah Mehmood Qureshi while receiving the team of Chinese medical doctors which arrived in Pakistan on March 28, 2020 stated:
“Chinese have once again shown to the world that they are friends of Pakistan. They care for us. We stand with each other in difficult times. This is a unique relationship and such testing times tell us how close we are to each other,”
China on more than one occasion has thanked Pakistan for the assistance, which it had provided when the corona virus outbreak had begun and has assured full support to Pakistan. Pakistan President, Arif Alvi had also undertaken trip of China in March, in order to show solidarity with it’s ‘all weather’ ally (he was the first head of state to visit China, after the outbreak of the deadly epidemic). Alvi’s China visit took place days before the lockdown was initiated in Pakistan a number of MOU’s were signed between both sides to counter the deadly epidemic. While Pakistan wanted to extend it’s solidarity with China, something which was acknowledged by Beijing, it also got assurance regarding it’s fighting against the corona virus.
Commenting on his China visit, the Pakistani President, Arif Alvi said:
“China trip was very beneficial to show support & counter propaganda. We also need to get technical help from them for biggest health crisis Pakistan is going to face. Their experience is unique. Six hours of exhaustive meetings took place. Signed many MOUs for #iFightCorona.”
Assistance from other quarters
While it is true, that Beijing has been quick to provide logical assistance to Pakistan, China’s financial assistance would not have been sufficient for Pakistan to provide much needed relief, to the not so privileged in Pakistan. In this context, the International Monetary Fund has acceded to Pakistan’s request of 1.4 Billion USD (under the Rapid Finance Instrument for fighting the coronavirus) according to sources. This amount would help Pakistan to increase it’s foreign exchange reserves as well as provide budgetary support at a time the country faces a serious economic slowdown. The World Bank and Asian Development Bank (ADB) have also provided Pakistan to the tune of 1 Billion USD and 1.5 Billion USD. The Pakistan PM had referred to the assistance provided by international financial institutions in his social media recording on Sunday.
It would be pertinent to point out, that Pakistan is already working with the IMF for a three year program under the Extended Fund Facility Program (EFF). The organization had sanctioned 6 Billion USD and according to analysts and rating agencies, it is the reform program of the IMF, which had played a key role in Pakistan being able to stabilize its economy (in December 2019, Moody’s investor’s Services had raised Pakistan’s credit rating to ‘stable’ from negative). Pakistan has reiterated its commitment to the EFF (due to the current crisis, IMF will be unable to release the third trance, of 450 Million USD, of the 6 Billion USD loan).
Not only has the assistance from IMF, ADB and World Bank come as a major relief for Pakistan as battles the coronavirus, and its economic implications. Islamabad would also be heaving a sigh of relief, that the review of Pakistan’s greylisting by the international financial watchdog, FATF (Financial Action Task Force) has been pushed from June to August/September 2020 . Pakistan, which was put on the greylist in 2018 was given 27 points to comply with, and it has only been given two extensions failing to convince FATF on 13 of the 27 points (Beijing has been extending support to Pakistan). While earlier Islamabad was to submit it’s progress in April 2020, it has now got time till July 2020 to address the points it needs to comply with. In the long run, it will need to address the points raised by FATF it wants access to international financial institutions and needs to carry out transactions without any problem.
Imran Khan’s dilemma with regard to the lockdown
In the last few months, Pakistan’s economy was beginning to show some signs of a revival, and this was acknowledged by international agencies and a number of countries who had begun to show interest in investing in the country. There is no doubt whatsoever that the coronavirus has come as a sudden setback. With the number of cases steadily rising, Imran Khan’s challenges are only going to increase and the dilemma for the Imran Khan government will be to keep the lockdown for how long. Businesses have been opposed to the lockdown and sooner or later are likely to pressurize Khan for removal of the lockdown (a decision has already been taken to open some companies, which supply to brands like Puma and Nike, with only essential employees, while taking key precautions such as ensuring regular disinfection) as well as a more comprehensive package which Khan’s government may not be able to provide. Opposition parties, Pakistan army (which has not been on the same page as Khan on a number of issues, including the handling of the coronavirus) and China upon whom Pakistan is dependent have of course been backing the lockdown. Given the lack of medical facilities, there may not be any other option but to lockdown.
In the midst of all these challenges, there is some relief for Pakistan:
First, while Islamabad may publically hail China for its assistance, the assistance from multilateral bodies, IMF, World Bank and ADB is extremely handy at this point of time, for Pakistan to deal with the coronavirus crisis. The assistance provided by IMF, World Bank and ADB also raises the point of whether the obituary of ‘internationalism’ and ‘multilateralism’ and the relevance of international institutions, with all their flaws, was rather premature.
Second, the delay in the FATF gives Pakistan some more time, though it will have to address the remaining points and can not be evasive in the long run. Turning a blind eye to the activities of terror groups and their financing is not likely to benefit Pakistan in anyway.
Islamabad’s task is cut out however, and it remains to be seen how the government deals with the multiple problems arising out of the coronavirus (Pakistan’s growth forecast for 2020 has been reduced from 2.6% to 0.8% for the current fiscal year). In the short run, it may be able to weather the storm, albeit with great difficulty, but in the longer run it is in for some serious problems. The Pakistan government would however be relieved with the above two developments at this point of time.