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China provided financial assistance to Pakistan approximately four times in a six-month period to help bail the country out of its economic crisis. The year 2023 was marked by a severe economic downturn, soaring inflation, and political and social turmoil, making it a challenging time for Pakistan. The World Bank reported that over 39.4% of the population lived below the poverty line, and more than 12.5 million people were facing impoverished conditions. The country’s food security was also a major concern, with 8.5 million people experiencing acute food insecurity due to high inflation and a balance of payments crisis.
The risk of Pakistan defaulting on its debts became a major concern, prompting many people to leave the country in search of better opportunities. The country was facing a severe debt servicing to government revenues ratio, which cast doubt on its economic future. To address these challenges, Pakistan sought assistance from the International Monetary Fund (IMF) and engaged in negotiations with other countries and multilateral institutions for financial support.
In January, Pakistan’s foreign reserves reached a critically low level, causing concerns about the country’s ability to cover its import bills. As the year progressed, Pakistan faced multiple challenges related to its exchange rate, inflation, and debt servicing. China and other countries provided loans and financial assistance to help Pakistan navigate its economic crisis and avoid defaulting on its debts.
The year 2023 was an eye-opener for Pakistan, highlighting the need for sustainable economic reforms and concerted efforts to address the country’s multifaceted challenges. As the year came to a close, Pakistan remained focused on pursuing reforms in key areas such as energy, fiscal policy, debt restructuring, and export diversification to secure its economic stability and minimize the risk of default in the future.