Salma Faheem has not spoken to her husband, Mohammed, since June. That is when he dropped her and their three children off in his home village of Dalma in Pakistan’s northwestern Khyber Pakhtunkhwa Province because he could no longer afford for them to live with him in the southern city of Karachi.
Instead of living in one room in an urban slum with water on tap and a gas-powered cooker, Salma has to walk an hour every day to fetch water and she must cook her family’s meals on a wood-fired stove.
“I hate it here,” she said by telephone. “I loved it in Karachi.”
Photo: EPA-EFE
Her husband is not happy either, but said he feels he had no choice.
Cash-strapped Pakistan’s US$350 billion economy is in meltdown with low growth, a weak currency and spiraling prices.
The pain is being felt most keenly by those living on low incomes in cities. Some have decided that the only answer is to leave or to send their families back to their home villages, where they can live more cheaply thanks to family networks and assets.
Faheem, 33, said that the 35,000 rupees (US$126.26) he earns a month as a furniture handler and loader could no longer stretch to cover food, rent and tuition.
“In the village, the house is ours so it is rent-free,” he said. However, “I loved having them around. I miss my children.”
Like other developing countries, Pakistan is heavily reliant on imports of oil, gas and other commodities, and has been hit hard by the COVID-19 pandemic, the global slowdown that followed the war in Ukraine and floods last year that submerged one-third of the country.
High fuel and energy prices have pushed inflation to 31.4 percent year-on-year last month, up from 27.4 percent in August, and there is little the new caretaker government, which took over in August, can do to rein in prices.
A US$3 billion loan program, approved by the IMF in July last year, averted a sovereign debt default, but reforms linked to the bailout, including an easing of import restrictions and a demand that energy and fuel subsidies be removed, have thrown oil on the inflation fire. The economic crisis is exacerbated by rising political tensions ahead of a national election scheduled for January.
With no relief in sight, some people in the nation of about 240 million are cutting costs the only way they can: by moving home to their villages.
“The decision to return to our hometown was not an easy one,” said Waseem Anwar, who in May moved with his wife and five children to the small dusty town of Chowk Marlay — about four hours from Lahore.
His wages as a water filter and sanitary fittings installer could no longer cover rent, utilities, medical expenses and tuition in the city.
“Although the work opportunities here are not as plentiful, the reduction in my overhead expenses to about half ... has provided great relief,” said Anwar, who now works as a plumber.
There is no immediate data available on the total number of people who have moved back to villages in the past few months, but researchers cite substantial anecdotal evidence based on dozens of conversations with so-called reverse migrants and their relatives.
One reason that hard figures are difficult to come by is because this year’s census operation meant the labor force survey, normally carried out every two years by the Pakistan Bureau of Statistics, has been delayed indefinitely, said Bilal Gilani, executive director of research firm Gallup Pakistan.
“The labor force survey is the main data source for migration and reverse migration,” Gilani said, adding that other surveys provided evidence of some population movements.
“Many of our surveys suggest that cutting costs is a major way by which people are surviving this flood of inflation as other forms of mitigation, such as doing more hours or a second job, are also not available,” he said. “Avoiding rent in [the] city by sending families back to rural areas or avoiding food costs by returning to villages where there is own-grown wheat, and meat and milk through owned livestock provides a cover.”
While the government has said it expects inflation to ease eventually, it warned that prices would remain high next month due to an upward adjustment in energy tariffs and a major increase in fuel prices.
The South Asian nation’s power sector has been plagued by high rates of power theft and distribution losses, resulting in accumulating debts across the production chain.
A Pakistani Ministry of Finance official, speaking on condition of anonymity as they were not authorized to speak to the media, said that the government had rolled out a range of targeted social safety net programs aimed at income support, food assistance and healthcare.
For example, the Benazir Income Support Program, with a budget of 471 billion rupees for the current financial year, disburses payments to more than 9 million families.
Other schemes help enroll millions of children from low-income homes into schools and provide healthcare and cash transfers to prevent child stunting, which affects 40 percent of children younger than five.
“We are fully committed to ensuring that the most vulnerable segments of our society are protected during these trying times,” the official said by phone from the capital, Islamabad.
Policy experts say the government should support poor households by lowering taxes, such as sales levies, in the short term and introducing a targeted subsidy system, which could help narrow the fiscal deficit.
“If even a part of the untargeted subsidy to energy [among others] can be targeted, it would make a big difference,” said Haris Gazdar, director at the Karachi-based Collective for Social Science Research.
Gazdar said that while the recent trend of reverse migration would not have major economic effects immediately, because workers would likely return to cities once the economy picked up, it could lead to “longer lasting” problems with, for example, many children being taken out of schools.
He urged Pakistan to learn from countries like the US, where social security benefits kick in when someone becomes jobless, and neighboring India, where citizens can enroll for work, such as building roads, digging wells or creating other rural infrastructure, and receive a minimum wage for at least 100 days each year.
“These are responsive systems, which we do not yet have and would need to work towards,” Gazdar said.
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
The New Taiwan dollar and Taiwanese stocks surged on signs that trade tensions between the world’s top two economies might start easing and as US tech earnings boosted the outlook of the nation’s semiconductor exports. The NT dollar strengthened as much as 3.8 percent versus the US dollar to 30.815, the biggest intraday gain since January 2011, closing at NT$31.064. The benchmark TAIEX jumped 2.73 percent to outperform the region’s equity gauges. Outlook for global trade improved after China said it is assessing possible trade talks with the US, providing a boost for the nation’s currency and shares. As the NT dollar
The Financial Supervisory Commission (FSC) yesterday met with some of the nation’s largest insurance companies as a skyrocketing New Taiwan dollar piles pressure on their hundreds of billions of dollars in US bond investments. The commission has asked some life insurance firms, among the biggest Asian holders of US debt, to discuss how the rapidly strengthening NT dollar has impacted their operations, people familiar with the matter said. The meeting took place as the NT dollar jumped as much as 5 percent yesterday, its biggest intraday gain in more than three decades. The local currency surged as exporters rushed to
RSS