The Economy In Plain Speech

Why does the rupee fall? Why does the IMF keep showing up? Why does your father say petrol used to be 30 rupees a litre when you were small, and it is now over 280? These are not random misfortunes. They are connected, and they make sense once you see the basic shape. Today we draw the basic shape of the Pakistani economy in plain speech, without the jargon that makes ordinary people feel stupid.

A country is, in money terms, a household with the world. Pakistan exports textiles, rice, surgical instruments from Sialkot, leather from Kasur, and now some IT services. With those exports it earns dollars. Pakistan imports oil, machinery, edible oil, gas, mobile phones, and luxury cars. With those imports it spends dollars. Almost every year since 1990, Pakistan has imported more than it has exported. The gap is called the trade deficit. The trade deficit has to be paid for somehow. There are only three ways: borrowing dollars, receiving remittances from overseas Pakistanis, or selling bits of the country (privatisation, foreign investment).

Now the IMF. Pakistan has signed 23 IMF programmes since 1958, more than almost any other country. An IMF programme is a loan from the International Monetary Fund, the global lender of last resort, given to countries that are about to default on their dollar debts. The IMF lends about three to seven billion dollars per programme, paid out in tranches over two to three years. Each tranche is unlocked only when Pakistan meets a list of conditions: lower the budget deficit, raise tax collection, reduce subsidies on petrol and electricity, let the rupee find its market level. These conditions are why your bills go up after every IMF deal. The IMF is not your villain; the structural deficit is. The IMF is a symptom, not a disease.

The rupee fall is not a single event. In 2017 the rupee was at 105 to the dollar. In 2024 it crossed 280. That is not an accident; it is the natural result of a country importing more than it exports. When demand for dollars is high and supply is low, the price of dollars rises in rupees. The State Bank of Pakistan tried for years to defend an artificial rate, burning through reserves to do so. After 2018 it largely stopped. The rupee now floats, with mild interventions. A floating rupee is painful in the short term but honest in the long term. Pretending the rupee is worth more than it actually is, just hides the problem and makes the eventual fall worse.

What can you, a 22 year old, do with this knowledge? Three concrete things. One: earn in dollars where you can. Freelance, remote work, exports. Each dollar you earn at the freelancer rate of 280 to 1 is doing patriotic work that no slogan can match. Two: pay your taxes. The biggest reason Pakistan goes back to the IMF is that less than two percent of citizens file income tax returns. If your generation files at ten percent, the next IMF round shrinks. Three: vote, write, push for documentation of the economy. The undocumented economy, retail without receipts, real estate without records, is half the country and pays nothing in. The economy is a long fight, but it is your fight.