Pakistan is currently facing a lot of stress in its economy with inflation, a weakening currency, depleting foreign exchange reserve and a delay in the release of an IMF loan. While this has not yet had an effect on student mobility, this may change if the situation continues over the longer term.
In its latest global forecast for 2023-24, the IMF lowered the economic growth rate forecast for Pakistan from 2 percent to just 0.5 percent. The country saw year-on-year inflation of 35.4% as of March 2023, which is continuously increasing with price increases of 4 percentage points in just one month and spiralling prices for basic food items such as wheat flour, rice and milk. Additionally, the Pakistan rupee has depreciated to a record low of 287 per US dollar.
The situation of foreign exchange reserves has become acute, although some recovery was seen in March and the governor of the State Bank of Pakistan in his address to international investors provided assurances that the situation was turning around. As of the end of March 2023 the country had forex reserves of $4.2bn which is about enough to cover 3.5 weeks of imports. Restrictions have been placed on imports, which means that there will be continued supply disruptions.
Last year’s devastating floods and ongoing political uncertainty are heightening the stress in the economy. In addition, the government has been described as making populist choices instead of hard reforms, such as wheat and petroleum subsidy packages announced last month.
The IMF loan which is critical for Pakistan - to unlock other external financing avenues and help avert a default on its obligations – is conditional on reconfirmation of $6bn financing commitments from the gulf countries and China. There is currently an impasse due to reluctance from gulf countries to lend more money to Pakistan as it seeks more structural reforms in the country.
British Council Comments:
The impact of the current state of Pakistan’s economy on student mobility is not immediately evident but based on available information and consultation with our agent network, it appears that no changes are expected as of now.
However, if the economy does not stabilise shortly, this may escalate the situation affecting the availability and outflow of forex reserves. Special attention is therefore needed from the UK HEIs to monitor the developments on this front and be prepared to make suitable arrangements for the students from Pakistan enrolled in the UK if it becomes more difficult for them to obtain foreign currency.
If you have any questions, please contact Sandeepa Sahay
For further details, please see:
https://tradingeconomics.com/pakistan/inflation-cpi
https://www.sbp.org.pk/press/2023/Pr-14-Apr-2023.pdf
https://www.dawn.com/news/1743137