Pakistan may increase loan interest rate up to 19%; healthcare system on the brink of collapse

HIGHLIGHTS

• Pakistan may hike interest rates by up to 19%
• The country’s healthcare system is on the verge of collapse
• There is shortage of essential medicines, namely Panadol, Insulin, Brufen, Disprin, Calpol, Tegral, Nimesulide, Hepamerz, Buscopan and Rivotril, etc

Amid the severe economic crisis, Pakistan's government has decided to raise the policy rate to 19 per cent or 200 basis points, which will be an increase of 2 per cent. Currently, it stands at 17 per cent. This move is aimed to accept the pre-condition of the International Monetary Fund (IMF), reported Express Tribune.

With the hike in rates, Pakistan has gone ahead with another pre-condition of the IMF for the release of USD 1.1 billion in critical funding, a part of the USD 6.5 billion bailout package. The announcement of a hike in interest rates comes on the basis of the government's rate set in the auction to secure domestic debt.

According to The Express Tribune report, Pakistani authorities' decision to raise the interest rate to 19 per cent, is barely below the previous record of 19.55 per cent established in October 1996.

A technical-level discussion had taken place between Islamabad and the IMF review delegation, the report quoted sources from Pakistan's Ministry of Finance as saying.

Besides this, Pakistan has taken several austerity measures to cut costs such as barring ministers from staying at 5-star hotels abroad or travelling in private jets. Government officials have also reduced their salaries.

Healthcare collapse in Pakistan

Amid an unprecedented economic crisis in the country, the healthcare system of Pakistan is not in a good shape as the patients are struggling with basic medicines. This has happened due to the absence of forex reserves, which has further affected the country's capacity to import the required medicines or the Active Pharmaceutical Ingredients (API) used in domestic production, news agency ANI reported.

This has forced local pharmaceutical manufacturers to bring down their production as patients suffer in hospitals. The shortage of important drugs and medical equipment had led doctors to stop surgeries.

Some Pakistan media reports showed that the operation theatres don't have even a week's stock of anaesthetics required for sensitive surgeries, including for heart, cancer and kidney. This could also bring in job losses in Pakistan, leading to an increase in miseries of people.

The drug companies have blamed the banking sector for the problem in the healthcare system by stating that commercial banks are not granting fresh Letters of Credit (LCs) for their imports.

Besides that, drug retailers in Pakistan's Punjab have reportedly complained about the shortage of essential medicines, namely Panadol, Insulin, Brufen, Disprin, Calpol, Tegral, Nimesulide, Hepamerz, Buscopan and Rivotril, etc. "The worst medicine crisis would erupt in the country if current policies (ban on imports) remain in place for the next four to five-week," Pakistan Pharmaceutical Manufacturers' Association (PPMA) Central Chairman Syed Farooq Bukhari told the Express Tribune in January.

Early this month, the Pakistani government and IMF staff completed the ninth assessment of the USD 6.5 billion bailout package without reaching an agreement at the staff level. The Pakistani government hoped that they would be able to persuade the IMF to execute the conditions gradually. Islamabad's aspirations were crushed, however, during the IMF mission's 10-day visit to Pakistan.

Pakistan has secured loans from China, Qatar, Saudi Arabia, UAE, and IFIs - such as the World Bank, Asian Development Bank, and Islamic Development Bank.

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