Opinion | The Economic Crisis in Pakistan and Its Ripple Effects on PoK and Gilgit-Baltistan

The human toll is what hits hardest. In Muzaffarabad, a police officer died and dozens were injured in May 2024 clashes over rising costs—proof the frustration’s boiling over. In Gilgit, folks have marched for days against land grabs and power cuts, their banners screaming for rights Pakistan’s never granted.

Pakistan’s economy has been walking a tightrope for years now, and as of April 2025, it’s still teetering on the edge. Inflation has calmed down a bit—hovering at a modest 0.7% earlier this year, the lowest in decades—but don’t let that fool you into thinking the storm has passed. The country’s been battered by political chaos, soaring debt, and a reliance on foreign loans that’s left it gasping for air. For the average Pakistani, life’s gotten tougher, with prices for basics like food and fuel climbing faster than wages can keep up. But if you think that’s the whole story, take a step back and look beyond the mainland. Out in the rugged, mountainous areas of Pakistan-occupied Kashmir (PoK) and Gilgit-Baltistan, the economic crisis isn’t just a headline—it’s a daily grind that’s pushing people to their limits. These areas, already sidelined by Islamabad, are feeling the squeeze in ways that are raw, real, and often overlooked.

Let’s start with the big picture. Pakistan’s economic woes didn’t pop up overnight. Years of borrowing—think $220 billion in national debt by 2022—coupled with sluggish growth have painted the country into a corner. The numbers tell a grim tale: GDP growth has limped along at around 3% annually while debt ballooned at 14% a year during the past couple of decades. Add in global shocks like the Russia-Ukraine war spiking fuel prices and a political merry-go-round that’s left governance shaky, and you’ve got a recipe for trouble. The IMF’s stepped in with bailout after bailout—$6 billion here, $3 billion there—but the conditions attached, like cutting subsidies and hiking energy costs, hit the poorest the hardest. For a country where foreign reserves once dipped to a measly $2.9 billion in 2023, barely enough for three weeks of imports, recovery’s been more of a hope than a reality.

Now, zoom into PoK and Gilgit-Baltistan, and you’ll see how this national mess trickles down—or rather, crashes down—on these regions. These aren’t just dots on a map; they’re home to millions who’ve long felt like second-class citizens under Pakistani rule. PoK, often called “Azad Jammu and Kashmir” by Pakistan, and Gilgit-Baltistan, a sprawling northern territory, aren’t fully integrated into the country’s constitutional framework. They don’t get the same political clout or economic attention as Punjab or Sindh. So when Pakistan’s economy takes a hit, these areas don’t just stumble—they get knocked flat.

Take the cost of living, for starters. Inflation might’ve eased nationally, but in PoK and Gilgit-Baltistan, the prices of essentials like wheat, fuel, and electricity are still choking households. Back in 2023, protests erupted in Muzaffarabad, PoK’s capital, over sky-high electricity bills and food costs. Fast forward to today, and the anger hasn’t cooled. Traders and locals there have been hammered by more than just inflation—trade with India, once a lifeline, shriveled to almost nothing after three-quarters of Pakistan’s crisis since its independence. You see, Pakistan stopped most trade with India after the 2019 Pulwama attack, slashing exports from $45 million a month to a pitiful $2.5 million. That’s left local traders in PoK reeling, with no buffer against the economic storm back home.

Up in Gilgit-Baltistan, it’s a similar story, but with a twist. This region’s got its own set of headaches—power outages that last days, wheat shortages, and taxes that feel like salt in the wound. Just this January, protests shut down the Karakoram Highway, stranding 700 trucks on the China-Pakistan Economic Corridor (CPEC) routes. The locals were fed up with blackouts and a government that promised fixes but delivered zilch. With harsh winters and rugged terrain, people here rely on steady supplies of food and fuel to survive. When Pakistan’s economy falters, those supplies dry up, and the protests get louder. The Hunza Awami Action Committee and traders’ groups have been at it for months, demanding basics that Islamabad can’t—or won’t—provide. The China angle adds another layer. CPEC was supposed to be Pakistan’s golden ticket, a $62 billion lifeline to connect China’s Xinjiang to Gwadar port through Gilgit-Baltistan. But here’s the catch: while China’s poured money into highways and power plants, the benefits haven’t trickled down to the locals. Instead, they’re stuck with higher costs and disrupted lives. Land grabs for projects like the Moqpondass Special Economic Zone have sparked resentment, and the debt Pakistan’s racked up—30% of it owed to China—means more pressure to squeeze these regions for revenue. The hydropower potential here is massive, over 30,000 MW, but the power lines don’t seem to reach the villages—they’re lighting up Punjab instead.

What’s worse, the political limbo in PoK and Gilgit-Baltistan makes it harder for them to weather this crisis. Neither region has full provincial status, so their voices barely register in Islamabad. In PoK, the government’s a puppet show, with real power resting with federal bigwigs. Gilgit-Baltistan’s been dangling as a “provisional province” since 2020, but that’s just a fancy title—no real autonomy, no real budget. When Pakistan’s scraping by on IMF loans, these areas are the last to see a dime. Development funds get diverted to plug holes elsewhere, leaving locals to fend for themselves.

The human toll is what hits hardest. In Muzaffarabad, a police officer died and dozens were injured in May 2024 clashes over rising costs—proof the frustration’s boiling over. In Gilgit, folks have marched for days against land grabs and power cuts, their banners screaming for rights Pakistan’s never granted. Families are skipping meals, kids are out of school, and the elderly are burning whatever they can find to stay warm. The maternal mortality stats might’ve improved—down to 186 per 100,000 live births in 2019 from 276 a decade earlier—but healthcare’s still a pipe dream for most. When the economy’s this tight, social services are the first to go. And then there’s the unrest. Economic hardship fuels discontent, and in places like PoK and Gilgit-Baltistan, where people already feel colonized, that’s a powder keg. The Joint Awami Action Committee in PoK and groups like the National Equality Party in Gilgit-Baltistan aren’t just griping—they’re organizing. Some whisper about breaking free, maybe even rejoining India, though that’s a long shot. For now, it’s sit-ins and highway blockades, but the longer this drags on, the uglier it could get. Pakistan’s military, ever the puppet master, has tried distractions—rallies over Quran burnings in Sweden, of all things—but the locals aren’t biting.

So where does this leave PoK and Gilgit-Baltistan? Caught in Pakistan’s economic quicksand, that’s where. The mainland might be clawing its way back—reserves up to $9 billion, inflation dipping—but out here, it’s a different world. The IMF’s strict rules mean more austerity, more cuts, and guess who feels it most? Not the elites in Lahore or Karachi. It’s the mountain folks who’ve been ignored for decades, now stretched thinner than ever. Pakistan’s crisis isn’t just about numbers—it’s about people, and in PoK and Gilgit-Baltistan, those people are running out of patience.

Syed Jahanzeeb,
Strategic affairs commentator I Pakistan Affairs Observer
Email : syedjahanzeeb2@gmail.com