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Photo Source: Dawn

Pakistan Reader# 274, 18 January 2022

Five Risks facing Pakistan: Review of the Global Risks Report 2022



Debt Crisis, extreme weather patterns, inability to stabilize price dynamics, failure of cyber security measures, and environmental damage

Sneha M

A brief note on the report
On 11 January, the World Economic Forum published its annual Global Risks Report 2022. The report series tracks “global risk perceptions among risk experts and world leaders in business, government, and civil society.” The report examines societal, economic, environmental, geopolitical, and technological risks faced across borders. The 2022 report concludes that when the world is grappling with the pandemic- a divergent recovery will threaten further, affecting long-term prosperity for all. The report predicts that growing insecurity, worsening impacts of climate change, and political persecution will force millions to flee from their homeland. 
 
The report identifies five significant risks. Top of the list is the debt crisis, followed by extreme weather occurrences, inability to stabilize price dynamics, failure of cyber security measures, and human-induced environmental damage.
 
The following analysis is an attempt to understand these risks vis-à-vis Pakistan.
1. The debt crisis
The repayment and service of external debt is the most pressing issue confronting Pakistan’s economy, even before the pandemic. However, further borrowing indefinitely has produced a vicious cycle in which greater borrowing has led to an oncoming economic disaster. Evidence supports the assumption that a large amount of government debt hurts economic growth prospects and that the impact worsens as debt grows. According to data, Pakistan's external debt has reached a staggering USD 119.8 billion in 2021. In 1970, it was only USD 3.5 billion and in 2018, USD 93 billion. 
 
In the long run, these debts become unsustainable, jeopardising Pakistan’s sovereignty. The latest illustration of lenders' gradual loss of sovereignty is the imposition of new taxes that will disproportionately affect low- and middle-income consumers through the implementation of SBP. Additionally, the rising debts have snatched Pakistan's economy to create more jobs and alleviate poverty. Dawn reported that the only way forward to success is "to broaden its tax net and control non-productive civil-military government expenditure."
 
2. Extreme weather patterns
Several studies in recent years have discovered that Pakistan’s climate is becoming increasingly unpredictable, resulting in frequent and disastrous flooding, droughts, glacier melts, and — most critically — temperatures more significant than the world average. With sub-regions of Pakistan experiencing harsh weather, they are expected to persist in the future. Extreme climate events are expected to become more common and intense, posing a greater risk of disaster, particularly for the poor and minority populations.
 
Be it the deadly heatwave in Karachi that killed over 2,000 people due to dehydration and heatstroke in 2015, or the unprecedented rains in August 2020 that killed over 90 people, or the recent Murree Tragedy that stranded many tourists- all of these incidents can be considered as snapshots of varying weather patterns in Pakistan.
 
3. Inflation
From the beginning of 2021, the PTI government has been harshly criticized for drawing the inflation rates to double digits, which was at its peak - 17.4 per cent in November 2021. Consumer prices continued to grow in December 2021, with inflation rising to 12.3 per cent from 11.5 per cent, the highest level in nearly two years, according to figures issued on 1 January 2022 by the Pakistan Bureau of Statistics (PBS).
 
The federal government renewed borrowing from the central bank, has contributed to mounting inflation in 2021. Matters are made worse by PTI not owning up to its mistakes of; poor governance, failing to address systemic flaws facing the economy, and expansive fiscal policies ahead of elections.
 
4. Failure of cyber security measures
The report rightly points out “cybersecurity threats are growing and outpacing society’s ability to effectively prevent or respond to them”. This is true in case of Pakistan as well, the country has witnessed massive data breaches, including the FBR hack in 2021. Notably, there is little to no evidence in addressing cybersecurity threats.
 
Meanwhile, the Federal Investigative Agency Chief claimed that increasing numbers of cyber complaints implied people's confidence in the system. However, in reality, the average number of complaints per month has quadrupled in four years, reflects the expansion of internet and cellular service, and is more a reflection of how quickly the digital world is expanding than of increased trust.
 
5. Human-induced environmental damage
One of the cases is to do with the construction of new dams, these dams have already restricted water flow into the Indus delta, but climate change has hastened the devastation, with sea incursion destroying four million acres of agricultural land over the years, causing 1.2 million people to move. The question to be addressed is; does Pakistan need mega dams? To substantiate further, Pakistan has the most incredible intensity of greenhouse gas emissions in South Asia. It emits "more greenhouse gases per unit of GDP than any other South Asian country." To add to that, government or opposition parties do not engage or regulate industrial emissions or the use of chemicals.
 
To conclude, Pakistan is definitely not alone in the game, but collective action of the administration and community can avoid the brink of multi-faceted challenges faced today. Moreover, the purpose of such internationally recognised documents lies in the acceptance and validation of respective governments to act on it.
 
References
"Debt crisis risk," Dawn, 13 January 2022
Amin Ahmed, "Report sees debt crisis as top risk faced by Pakistan," Dawn, 12 January 2022
"The Global Risks Report 2022," World Economic Forum, 11 January 2022
Entrenched inflation,” Dawn, 5 January 2022
"Cybercrime complaints," Dawn, 4 January 2022
Consumer Price Index (CPI) Inflation for the Month of December 2021,” Pakistan Bureau of Statistics
Erum Zaidi, "SBP keeps inflation forecast unchanged; sees significant risk from high food, energy prices," The News International, 25 November 2021
Nasir Jamal, "The real pain of inflation," Dawn, 15 November 2021
"Government debt up by 22pc to Rs 38.7tr in two years," Dawn, 31 August 2021
 

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