Ground report: Daily life in Pakistan's worst economic crisis

“I buy onions and tomatoes by the piece. Seven each to last us from Sunday to Sunday with no top-ups during the week.” That’s how Mukesh Kumar, 40, father of two little girls, is managing his finances through Pakistan’s worst economic crisis in living memory. Mukesh holds down two jobs in Karachi; he is a peon at a government office in the morning and a handyman post 2pm. But even that is not enough.It’s cold comfort to him, but Kumar is not alone. Across Pakistan, families are tightening their belts, cutting down on essentials and forgetting luxuries. With three children in school, Karachi-based Martha and her husband Sharif Victor, who both work domestic jobs, are having a tough time coping. Between them, they earn close to 50,000 Pakistani rupees a month. But with wheat costing over 140 Pakistani rupees a kilo, the Victors are unable to stretch their money to last a full month. They are forced to make a single-pot meal for two or three days now. “The cost of petrol that enables our daily commute to work [almost 16km] and back is breaking our back and eating through most of our earnings,” says Martha. “I don’t think we can continue much longer like this. I shudder to imagine what might happen if things will only get worse before they get better.” According to oil major Shell, petrol costs 249.8 Pakistani rupees a litre. medium97723835Everyone is feeling the heatIt’s not just low-income people who are suffering. High costs are hitting families across the board. Amina Hassan owns a salon and multi-brand store in Karachi. While she doesn’t have to feed her family one onion and tomato a day or make one meal stretch into three, she’s still struggling. “Until a year ago, we would buy only imported butter, cheese and sauces from the supermarket. Now everyone I know is opting for local alternatives to majorly cut back,” she says.Hassan is worried about being able to pay her employees. “Even though we had a good December workwise, our overheads have been so astronomically high that we are being forced to dip into our savings. Today we are stressed about making ends meet, as well as being fair to our employees. For us, the topmost question remains: where will we get hold of resources?”As young parents, with hopes to educate their children abroad, the prospect of currency devaluation is terribly daunting, says Hassan. On January 30, Pakistan's currency plummeted to a record low of 270 against the dollar, as the government surrendered its control over the exchange rate to meet demands of the International Monetary Fund (IMF) for a bailout. !function(){"use strict";window.addEventListener("message",(function(e){if(void 0!==e.data["datawrapper-height"]){var t=document.querySelectorAll("iframe");for(var a in e.data["datawrapper-height"])for(var r=0;r Tougher times aheadAs Pakistan’s inflation hit a 48-year high, with a double-digit increase in the cost of most essential goods, no one is feeling spared. Hope has also dimmed as the country is bracing for record currency devaluation, higher taxes and electricity bills.The prospects are not looking good overall. The Consumer Price Index (CPI), the inflation monitor, rose by 27.6% in January compared to the same period last year, according to the Pakistan Bureau of Statistics (PBS), beating the finance ministry’s forecast of a 26% hike.“It is the highest reading since May 1975 when the CPI hit 27.8%. However, the rate hike is in line with market expectations due to a major breakdown in supplies of goods. Around 9,000 containers of food items, raw materials and other imported goods have been stuck at ports due to shortage of foreign currency,” reports The Express Tribune. !function(){"use strict";window.addEventListener("message",(function(e){if(void 0!==e.data["datawrapper-height"]){var t=document.querySelectorAll("iframe");for(var a in e.data["datawrapper-height"])for(var r=0;r The newspaper adds: “Pakistan’s inflation rate is the 19th highest in the world, which may further pick up pace due to the rupee devaluation, hike in electricity tariff and imposition of more taxes to meet the conditions agreed with the International Monetary Fund (IMF). The [Pakistani] rupee lost 16.4% of its value in the past five working days.” According to the PBS, Pakistan’s “inflation rate skyrocketed to 32.3% in rural areas, while it rose to 24.4% in the cities. There is a huge increase in food inflation, mostly because of disruption of supply chains and weak checks. Food inflation rose steeply to 45.2% in rural areas and 39% in cities last month”.Chef Samar Hussain, who runs a café and catering business in Karachi, says restaurateurs like hers are in dire straits and are uncertain of how long they will be able to sustain. “We are struggling in every possible way and on a very slippery path,” she says. medium97724135 “Our profits are almost abysmal. We are also being forced to keep prices down so we can get more customers. Everyone is being very sensitive about their spending. We don’t know where we are headed and there’s tremendous fear and paranoia that we will not be able to survive this,” adds Hussain.Businesses take a beatingSmall businesses are reeling under the combination of high prices and currency rates. Sundar Waqar, 32, is the proprietor of GF Foods, a home-based business of allergen-free food. About 95% of the ingredients used in her products are imported as they’re neither produced nor manufactured locally. For Waqar, the purchase of imported items isn’t a luxury but an essential. medium97724012 “We need to ensure all ingredients are certified allergen free and free of contamination as we are catering to medical conditions which require specific diets,” she says. “Recently, it has been nearly impossible to import ingredients owing to the non-availability of foreign currency and non-cooperation from banks to open letter of credits for raw materials. Moreover, the [Pakistani] rupee devaluation has led to a sharp and significant rise in the cost of ingredients, and the volatility and unpredictability of the final landed prices remains a big question mark as the exchange rate varies on a daily basis. Letter of credits, if opened by the bank, require 100% cash margin,” Waqar explains.For many, who run small businesses like her, importing raw material is challenging on account of meeting the minimum order quantities, which are set by the suppliers, and then getting business liquid money stuck for a minimum of 90 days (which may increase up to 180 days). !function(){"use strict";window.addEventListener("message",(function(e){if(void 0!==e.data["datawrapper-height"]){var t=document.querySelectorAll("iframe");for(var a in e.data["datawrapper-height"])for(var r=0;r “This double side-effect of currency fluctuation and large capital requirements renders small setups out of business as costs increase manifold,” she says. “Higher fuel costs are also impacting delivery costs as our clients are based across Pakistan.” Lack of ease of business, cumbersome processes and one too many loopholes also have everyone complaining. “I am not the most successful lawyer, but I definitely come in the top 10 when it comes to paying taxes,” says 57-year-old Ebrahim, a senior partner at a Karachi-based law firm. “Yet, I am feeling harassed these days by the Federal Board of Revenue with repeated notices asking for money over one pretext or the other.”According to him, he has been “opting for economy over business [class]” even when he is travelling on behalf of corporate clients. “We are no longer buying imported goods at home. My wife who designs and manufactures furniture also feels the pressure of making more so she can increase the salaries of her workers. I, too, am in the same boat, and try to give the highest increments to the ones on the lowest end of the pay scale,” adds Ebrahim.Hope fadesPakistan’s economic turmoil has come to a head. An IMF review mission has rejected the proposed revised circular debt management plan designed to manage the shortfall of payments of unpaid government subsidies owed in debt to the Central Power Purchasing Authority by distribution companies on grounds of it being unrealistic. medium97724058 It has asked the Pakistan government to raise the electricity tariff by 12.50 Pakistani rupees per unit in order to restrict the additional subsidy at 335bn Pakistani rupees for the current fiscal year, which is expected to drive inflation further. An already dire situation has become bleak, with absolutely no respite in sight. “Pakistan is facing a multidimensional crisis. Its economy is teetering on collapse due to a possible political crisis, the Pakistani rupee plummeting and inflation at decades-high levels is making it nearly impossible for its citizens to earn and to live a decent life,” says a volunteer at one of Pakistan’s leading social welfare groups. “Not only is it making it impossible for people to survive, it's affecting everyone’s mental health. Both the poor and rich are now sailing in the same boat with all hopes of making it through slowly fading away.” The author is a journalist based in KarachiRead more columns by the author here