Saturday, January 23, 2021

Pakistan Economy May Collapse Due to FATF Action

Pakistan Economy is in for a set back after the recent decision of the FATF. The Financial Action Task Force has put the nation under the watch list for terror financing, denting the Pakistan Economy. So will this affect other areas of Pakistan Economy? Will the nation be able to rise above it?

The FATF meeting was to decide the fate of Pakistan Economy and its involvement in money laundering and terror financing and the decision is unfavourable for Pak. While the FM of Pakistan had announced a ‘clear chit’ for Pak, the very next day the opposite came to light. Starting June of this year Pakistan will be on the watch list with a 3 months’ time to take serious measures against financing terror and money laundering.

Also Read: Pakistan Army Now Officially Deployed to Saudi Arabia to Counter Iran?

Pakistan Economy to Face Several Ill-Effects

The country will have to reevaluate its foreign policy to smoothen out ties with other nations. Currently, the country shares a healthy working tie with just 1 of its 4 neighbours. While the Pakistan-Iran ties may change for the better, the other 2 neighbours are openly critical of the foreign policies.

Furthermore, according to experts, Pakistan economy will be further hit as financial and trade relations with other countries may get fragile. After the recent FATF verdict, it seems like the Pakistan economy may lose financial support and other financial relationships, further hampering the country’s position. It was the US that insisted that Pakistan be put on the watch list, backed by France, Germany and other European nations. Surprisingly even China and Saudi Arabia backed the US, although their relations with Pakistan are good.

Also Read: Hafiz Saeed a Declared Terrorist; Has Pakistan Succumbed to US-India Pressure?

As reported in the Tribune, a Pakistan daily, the president of National Bank of Pak stated that the Pakistan Economy would face crisis and find it extremely difficult to cope up if the FATF decided to put it on the watch list. The country could face a hit to FDI and the stock market may take a blow too.

The Shaking Pakistan Economy and Ties

Although Pakistan was on the watch list even when it managed to get a huge loan from the IMF in 2013, at that time Pakistan enjoyed a relationship with the US. Now, with the CPEC and the Pak-China ties, US does not share the same reliability with the country. The country is now at the risk of facing an enormous import payments crisis as the foreign exchange reserves are shrinking.

Also Read: CPEC Project To Greatly Benefit Pakistan: Pak Media

It is also believed that the FATF was probably going to give a clean chit to Pakistan but was perturbed by Pakistani ministers making congratulatory public announcements on social media, making the FATF change its decision for the worse. The FATF discloses all official decisions via a formal press release and leaking the results before that is against the accepted norms.

Is the Pakistan economy thus facing a crisis because of its own leaders?

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