Pakistan’s Strategy During COVID-19 Pandemic

1. Introduction

International Monetary Fund (IMF) examines the status of economy of different countries and promotes global economic growth and financial growth, accordingly. Additionally, it also publishes case studies and global financial reports from time to time. The IMF released a report in October 2020 and the findings of this report were deplorable for the economists, stakeholders, and policymakers. The report described an austere story about the economic conditions of many states affected by COVID-19 pandemic. The IMF report concluded that COVID-19 badly affected the global economic order. More than 150 countries have obtained positive per capita income growth in March 2020 (prior to pandemic struck down), but due to shear break down in economic activities in the early 2020, the growth reversed. As many as 170 states experienced negative per capita income growth during March-October 2020 phase (International Monetary Fund [IMF], 2020).

The pandemic has pushed the contemporary global economic order into a recession. Many economists across the world have declared COVID-19 pandemic as a sequel to great depression of previous century. This is because it affected the economic activities of the world in a diverse way and resulted into a global economic disruption. Some other economists have assessed that the pandemic caused an economic shock three times worse than the economic recession of 2008 (Behravesh, 2020; "Great depression? Economists", 2020; Rebucci et al., 2020). The EU economy and emerging markets, such as G-20, BRICS, and ASEAN were badly affected. While, China has been fortunate enough to escape from this crisis.

Pakistan also experienced various challenges in socio-economic context amid the surging COVID-19 pandemic. Approximately, 27.3 million people were affected. Moreover, another chunk of 145 million people needed immediate economic relief. The daily wagers, hawkers, youth, and urban slum dwellers were amongst the most affected group of people. Due to the closure of Small and Medium Size Enterprises (SMEs), large industries, ports, airports, general transportation and tourism; people experienced economic depression (Mishal-E-Noor, 2020; Saleem, 2020). Despite many administrative and economic consequences, the government effectively addressed the concerns of population.

The economic condition of Pakistan was fragile at the time of outbreak of COVID-19 pandemic. The country required vigilant policy framework to tackle the worst challenges. There were insufficient foreign reserves to deal with the worsening situation. Moreover, there were governance related challenges as well. Islamabad was badly dependent on foreign donors to resolve its domestic economic challenges amid pandemic uprising.

The current study is divided into four main parts. The first part describes the strategy employed amid COVID-19 pandemic along with its worldwide and Pakistani view. The second part explains the strategy employed by the local government of Islamabad in dealing with the pandemic. The third part analyzes the challenges which are creating hurdles in politico-economic sector. The last part provides some policy recommendations to resolve the economic issues of Pakistan.

Theorizing Economic Strategy

Economic strategy is an important, newly developed, and a growing area in the field of economic consultancy. This discipline is the result of emergence of globalization and communication revolution. It was enrooted during 1990s and gained prominence in the first decade of 21st century. During the financial recession of 2008; the term, 'economic strategy' steadily started getting used in US and European economic literature.

The economic strategy usually deals with short-term economic goals in state paradigm. It focuses on the immediate and short-term economic solutions during the time of any crisis. For instance, it addresses what to do and how, in an efficient way. Additionally, it also addresses the issues and helps the state governments to enhance their performance in the field of economic development (PMCA Economic Consulting, n.d.; Pagni, n.d.).

The subject of economic strategy deals with short-term economic vision of the government of any state. This vision is implemented by the administration within a specific framework and under certain internal/external circumstances. The primary objective of this type of strategy is to achieve specific objectives, that is, to overcome a financial crisis/economic recession/depression (Scott, 1995).

It is evident from the above discussion that the economic strategy is an art of management of the state economy during short interval of time or in the time of crisis. This management is exercised due to internal/external or global factors. During the COVID-19 pandemic, the importance of this subject has taken a new tier of research. The economic track of the states was affected by COVID-19 pandemic and changed or have been in the silhouette of uncertainty. Therefore, the economic strategy was adopted by almost every state as well as by domestic, regional, and international organizations worldwide amid COVID-19 pandemic.

Strategy amid Pandemic: Perspective of World and Pakistan

The pandemic severely impacted every sector of state economy. For instance, tourism and hospitality industry, restaurants, transportation industry, education, and most importantly health were critically affected. The pandemic fetched far-reaching economic consequences for the developing as well as the developed states.

The crisis inflicted by COVID-19 pandemic upon humanity gave birth to global short fall in the economic order. Global financial and stock markets fell under the menace due to the pandemic. The supply of goods stopped across the world due to the closure of territorial and sea routes. Since January 2021, net GDP of the world had shrunk by nearly $ 22 trillion due to the breakdown of SARS2virus. Gita Gopinath, chief economist of IMF, is of the view that there has been far more long-term economic loss which could be counted in trillions during the time period 2020-2025. The G-20 economies were affected gravely and fell down to nearly 3.4%. The International Labor Organization (ILO) estimated 400 million full-time job losses worldwide. The income earned by skilled and unskilled workers descended to 10% (International Labor Organization [ILO], 2020). The contemporary economic system requires systematic policy changes to acquire a stable world economic growth (IMF, 2020). The COVID-19 pandemic forced the nation-states to alter their respective development plans in the wake of this situation of uncertainty. Many states across the world have started implementing the development plans for economic recovery from this crisis. An outlook in comparative perspective of the economic strategy by the world economies and Pakistan is precisely explained in Table 1 as follows:

Table. 1

Global and Pakistan's Response to Manage the COVID-19 Pandemic

Certain types of strategies have now become crucial to control the outbreak of any crisis in the world, such as COVID-19 pandemic. There is a need to properly assess the economic strategies of the states. Usually, the developing states do not take this practice seriously in the ordinary circumstances. Moreover, there is a need to introduce simple, diverse, and technology-oriented business models in the present scenario as well. This kind of model is now becoming important to provide economic relief not only to the entrepreneurs but to the general public as well. Additionally, transparency is required in the process of governance and administration to fight such kind of crisis not only at the state level, however, also at the global level.

Pakistan's Strategy During COVID-19 Pandemic

While arguing on a point during a press conference, former Prime Minister of Pakistan Imran Khan stated that Pakistan is a developing state with insufficient resources. However, our country needs additional economic support to feed its population. Pakistan spent US$ 8 billion during the pandemic, while America [with almost same ration population] spent US$ 4 trillion. This shows that where we stand in terms of economic growth and potential (Raza, 2021).

This picture depicts that, Pakistan was already experiencing a challenging economic situation before COVID-19 pandemic hit the country. In 2019, the Federal Government of Pakistan approached IMF for US$ 6 billion bailout package, as the economy was deteriorating. After the implementation of this economic package by the international financial institution, the country was just recovering from the economic crisis when COVID-19 pandemic hit Pakistan.

In the above-mentioned challenging situation, the federal and provincial governments adopted homogenous economic approaches and managed the crisis appropriately and effectively.

Due to COVID-19 pandemic, the government imposed complete lockdown in the country in March 2020 for the upcoming 10 weeks. Under this lockdown, every industry completely closed down and inter-provincial and inter-cities public transport got suspended as well. Tourism was halted and economy remained stunted. It has been estimated that Rs. 2.5 trillion were lost in this pandemic, while about 3 million people lost their earnings. In these circumstances, government included the following main points in the economic strategy to administer the resources and the people of the country:

Food Security

Food is a basic need of people. It provides survival for the human life. It is a source of energy for humans to perform different roles of their lives. It is the benchmark economy for any state. Food security is essential for any nation just like the other economic ingredients. This security is important to maintain the progress of a country. As an impact of COVID-19 pandemic, the year 2020 remained the worse year in terms of food insecurity. The pandemic caused 272 million people to suffer from severe food crisis worldwide (Committee on World Food Security, 2021; Reliefweb, 2021).

Despite the reality that Pakistan is a self-sufficient country pertaining to food, it has been estimated in a survey that, 40% of the household in Pakistan experienced moderate to severe food shortage during this pandemic (Haider, 2021). The daily wagers and the urban slum dwellers were among the most affected groups.

Despite self-sufficiency in food, the economic growth of the country was severely affected which, in turn, increased the poverty ratio (Dawlatchachi, 2020). Certain problems including an increase in poverty, job losses, and food insecurity in the country like Pakistan, owing to the COVID-19 pandemic, greatly impacted the vulnerable and marginalized segments of society (Raza, 2021).

The government did not face any shortage in rice stock, as the country had enough stock to overcome the challenging situation. This is because the state has a huge rice exporter in the international market. However, wheat and sugar crisis made the situation worst and Islamabad had to import wheat from other countries in order to fulfill the needs of its population. Pakistan was heavily dependent on imported pulses, oil, and seeds (Food and Agriculture Organization [FAO], 2020).

Pakistan needs to formulate an appropriate agricultural and crop zoning policy to transform its agriculture in order to overcome the ongoing food insecurity. The government provided economic relief and immediate stimulus package to farmers; however, this package was provided on a marginalized scale. The experts argued that 75% of Pakistan's exports are based on agriculture. Therefore, there is a need to wheel this huge economic giant on modern footings (Saleem, 2021).

Ehsaas Emergency Cash Financial Program

The provision of direct financial support to under-privileged and marginalized segments of population in a country during an emergency and crisis helped to mitigate or minimize the challenge in short term. This process also boosted the public confidence in government. Moreover, it also helped to transform the economic condition of the citizens in a positive direction. Financial support program provided ease to public grievances during the COVID-19 pandemic.

The informal sector of economy in Pakistan disrupted owing to the pandemic. Approximately, 27. 3 million people were affected. It was an extremely a difficult time equally for the employees working in informal sectors and for the Government of Pakistan. This situation pushed the government to take immediate steps to stabilize the economic condition of the country in the short run.

In first phase of COVID-19 pandemic, the Government of Pakistan announced Ehsaas Emergency Cash Financial Program. Under this program, the government approved Rs. 1.24 trillion relief packages for under-privileged families. Under this relief program, an amount of Rs. 12000 was given to every family for a period of four months. This program was initiated on 1^st April, 2020 to provide immediate financial help to the vulnerable population of Pakistan (Azeem, 2020).

Foreign Remittances

Pakistan's 11.4 million citizens live abroad. This population is working in the formal and informal sectors of many states. A major proportion of this diaspora is in Saudi Arabia and other Middle Eastern countries. During the pandemic, foreign remittances played a pivotal role in the economic and fiscal stability. These remittances uplifted the fiscal graph in a stable way and helped the Government of Pakistan to mitigate the economic and fiscal challenges in a short span. During the fiscal year of 2019 and 2020, US$ 21.8 billion and US$ 22 billion were sent by the citizens of Pakistan dwelling overseas. During July-December 2019, US$ 11.37 billion were sent by overseas Pakistanis. During July-December 2020, this figure crossed over US$ 14 billion. In 2022 and 2023, these remittances were calculated as US $ 29.87 billion and US $ 27 billion (Aazim, 2021; Aljazeera, 2023).

During the COVID-19 pandemic, foreign remittances saved grace for the economic stability and fiscal leverage of Pakistan. Due to job loss, many overseas Pakistanis returned to their homes with potential economic leverage. Due to Financial Action Task Force promulgations and suspension of the air services, these remittances were sent to Pakistan through bank accounts. The foreign remittances eased the fiscal pressure on the domestic economy. The Government of Pakistan provided efficient banking facilities through Roshan Digital Account to overseas Pakistanis during the first phase of COVID-19 pandemic.

Local Donors

According to the United Nations Development Program (UNDP), US$ 1.5 trillion are required to meet the Sustainable Development Goals (SDGs) until 2030 for the Asian countries. This huge amount is quite hard to be arranged by these states. The other story is more interesting than the previous fact by UNDP (DGI, 2020). Recent research has propounded that if every Asian citizen denotes 2% of their income, it would constitute a considerable amount (US$ 584 billion), that is, 40%, more than the amount required under SDGs. If this amount is counted in terms of per capita income of Pakistan, it would be US$ 48400, annually. If Pakistanis save this amount for the next 10 years, it would be enough to meet any big disaster or for long term economic planning.

Donations and public/private philanthropy play a vital role for the welfare of marginalized segments and deprived people of any society. It helps to stabilize the economic conditions of the people in short term. More organized process of philanthropy may impact the society in a more organized and powerful way. The philanthropy organizations, such as Al-Khidmat Foundation, Edhi Foundation, and PepsiCo Foundation played a vital role during the COVID-19 crisis in Pakistani perspective (Azeem, 2020; Saleem, 2021). Local philanthropy system in Pakistan is unorganized and it demands more assertive research to conclude its contribution in uplifting the economic conditions of the citizens. A rough estimate from different reports subject that more than 30 million people directly or indirectly seek help from the local donation programs.

International Support Agencies

International donor agencies and developed states also provided financial assistance to the developing states during the outbreak of natural disasters. Agencies and the global stakeholders remained active during the outbreak of any pandemic across the world. Pakistan also seeks financial support from many countries, state agencies, and international donor agencies. To some extent, this support minimizes the financial burden of the government. The financial support provided to Pakistan during the pandemic is given as follows:

Table 2

Financial/Material Support by Different Countries, Donors, and Financial Agencies to Pakistan

Note. (FAO, 2020)

Economic Challenges of Pakistan

During the COVID-19 pandemic, Pakistan experienced many challenges to boost-up its economic development. The challenges faced by country included high fertility rate, increase in poverty level, non-transparency in the economic sector, and the mismanagement of resources due to inefficient governance system. The summary of these issues is discussed as following:

Population Growth and Poverty

There is a direct link between fertility rate and economic inequality. The higher fertility rate results in lower progress in economy and rising graph of poverty. Population growth is problematic for stable economic growth (Linden, 2017). The population growth in Pakistan is touching 2.7%which is quite a high figure according to the international standard. The fertility rate in Pakistan is 6.5%. Every woman has 4-5 children. A United Nations report has estimated that Pakistan would become 3rd country after India and China in 2050 with respect to population growth (United Nations, 2017). The present trend of population growth is not a good sign for the economic development of the country. It is only increasing the poverty graph. There is a lack of sufficient resources for such a large proportion of population. Moreover, there is an urgent need to establish a proper family planning system to overcome this crisis.

Food Insecurity

Pakistan has failed to launch a proper food security program in the long run. Due to inefficient technical processes and poor agricultural infrastructure, the process of food security further deteriorated during the COVID-19 pandemic. In their reports, World Food Program and Food and Agriculture Organization warned that Pakistan may experience food insecurity crisis in the coming years. This is because the production of food items is not sufficient to meet the domestic needs of the population. These organizations also emphasized the need to increase the regional cooperation in order to overcome the ongoing crisis (FAO, 2020). Pakistan needs a proper food security strategy to mitigate the challenges of COVID-19 crisis and its aftershocks. For this purpose, regional cooperation at SAARC and other regional states may ease the tensions.

Decline in Foreign Direct Investment (FDI)

Foreign Direct Investment (FDI) is helpful for any state to stabilize its economic development. It provides financial arrangements in many sectors from the external sources. Moreover, it also projects an economic-friendly image in the global arena. The state of FDI in Pakistan is not encouraging for the economic development. The facts and figures of previous three years have not been good in terms of FDI. The financial year of 2018 only received US$ 1.7 billion FDI. It was stepped up to US$ 2.2 billion in 2019. Again, the FDI declined US$ 1.145 billion in 2020 (Raza, 2021). China is the only country with largest share of this investment. Pakistan needs an appropriate mechanism to attract the foreign investors, especially developed states to generate economic opportunities in order to fulfill domestic needs.

Mismanagement of Resources

The condition of governance in Pakistan is not good, for instance there is political uncertainty. The policy-making forums are not appropriately functioning. Management of the resources is also poor. The abrupt rotation and sudden changes on key portfolios are going on. This process disturbs the institutional working in different sectors. It also destroys the efficiency of senior administrators. Therefore, there is an urgent need to reform this culture. The implementation of institutional mechanism is required for the efficient running of state departments.

Conclusion

The COVID-19 pandemic hit the world economies in an appalling way. The economic fallout created problems in these states, resultantly. Many people experienced economic difficulties around the world, for instance majority of them lost their jobs. The aftereffects of this crisis pushed the world into a depressive state. The government provided food and relief packages to the marginalized groups for four months on emergency footings. Moreover, the government also adopted a moderate economic strategy to overcome the challenges inflicted by COVID-19 pandemic.

Pakistan's strategy to mitigate the challenges of COVID-19 pandemic was based on a narrow approach due to insufficient economic resources. The federal and provincial governments adopted a homogenous economic approach and managed the pandemic. This crisis learns an important lesson to Pakistan's administrative, political and economic machinery. The government helped the people through Ehsaas Emergency Relief Package and food items. Foreign remittances stabilized the fiscal position of the country. Domestic and international donors also provide direct and indirect financial help to the government. From the above discussion, it is concluded that the strategy of Pakistan is not sufficient to mitigate the challenge in the long-run. There is urgent need to frame a vigilant policy framework for encouraging economic development. The decentralization in the governance system and proper resource mobility as well as planning can play an efficient role for devising this vigilant policy.

Policy Recommendations

The COVID-19 pandemic affected everyone worldwide. It has also worst distressed the economic conditions of the people in Pakistan. It shattered the life of the public at large scale. It also devastated the economy. The prevailing condition of bad economy demands some policy reforms. These reforms would help transform the economy on positive lines. Some of the major recommendations are given below:

Vigilant Policy Framework

Pakistan still lacks a proper and vigilant policy framework to mitigate the aftereffects of the pandemic. Due to this delay, economic pressure on the country is rising. The IMF conditions have become more critical which would badly affect the economic growth of the country. Therefore, there is an urgent need to frame a vigilant policy in order to overcome the challenges of COVID-19 pandemic and the staggering conditions of economy.

Economic Development

Economic development is a critical aspect for every country to mitigate the challenges of any crisis. This is more critical in terms of Pakistan's declining economic conditions. Therefore, there is an urgent need to focus on business-friendly policies for the industrial and economic development of the country.

Good Governance and Decentralization

Governance is crucial to appropriately manage the resources to serve its citizens. The transparency in the system and decentralization in the process of governance play a pivotal role in the process of service delivery. Pakistan is still experiencing governance issues since its inception. Its governance is over-centralized. Resources are and policies are usually administered by the federal government. The provinces are ineffective/less prepared in administering the emergency conditions like Covid-19. There is urgent of decentralization in the process of governance. Local government system is very help in mitigating the challenges of any crisis like the ongoing pandemic. Pakistan must strengthen the system of local government by allocating resources and institutional powers and other such arrangements.

Planning and Resource Mobility

Planning and proper resources mobility is very helpful in mitigating the effects of any crisis. There is urgent need to implement an institutional system of planning and resource mobility at grassroot level. Crisis and pandemic are efficiently controlled at the local level in more appropriate way rather than through centralized system of planning and resources. So, the local and need based planning is very essential to control the ongoing and future challenges.

Conflict of Interest

The author of the manuscript has no financial or non-financial conflict of interest in the subject matter or materials discussed in this manuscript.

Data Availability Statement

The data associated with this study will be provided by the corresponding author upon request.