Pakistan finds revenue by renting New York’s historic Roosevelt Hotel to house migrants amid economic crisis

The Roosevelt Hotel, opened in New York in 1924, has been in the doldrums longer than the Pakistani economy. The jet set who enjoyed novelties such as an indoor dog kennel and rooms with television at the beginning of the last century turned their noses up at it as early as the 1970s. Since then, the former luxury hotel in Manhattan has lived off middle-class tourists and conference attendees. Covid-19 killed the hotel named after US President Theodore Roosevelt: Faced with losses of $37 million a year, it closed in October 2020.

New York will now rent about 1,250 rooms there for three years to house the sharply rising number of migrants in the city, according to the Pakistani aviation ministry. The $220 million in rental income goes directly to the depleted state coffers.

Pakistan only has enough foreign exchange for one month to import goods – in a normally functioning economy, a foreign exchange reserve for three months of imports is common. The situation is now so dire that since last week the Pakistani government has officially allowed barter trade with Afghanistan, Russia and Iran to obtain fuel, for example.

Rising prices due to the war in Ukraine and the damage from unprecedented floods last summer add to the economic malaise that arose as Pakistan attempted fiscal adjustments to meet the terms of earlier loans from the International Monetary Fund (IMF).

Reduced by half

As a result, the value of the Pakistani currency has fallen by half in a year, while inflation has skyrocketed to almost 38 percent. To add to the misery, Pakistan will have to pay off $22 billion in debt to foreign lenders next year.

On the edge of the financial abyss, Pakistan has pinned all hopes on a new emergency package from the IMF. However, negotiations with the IMF are deadlocked. Islamabad does not dare to implement the stricter conditions of the IMF for fear of even more inflation.

The IMF, for its part, is concerned about the political instability that arose after Prime Minister Imran Khan was ousted last year. In his fight for his political survival, Khan is diametrically opposed to the powerful Pakistani army command and demonstrations for or against Khan regularly turn into violence. This unpredictable situation will certainly last until the elections in September.

In this political and economic darkness, the lease of the Roosevelt hotel is the only bright spot. The $220 million in revenue from the hotel comes as the Pakistani government presents its budget later this week. Pakistani Prime Minister Shehbaz Sharif still says he hopes the deal with the IMF will be finalized before the state budget. Because with the lease of the Roosevelt hotel alone, Pakistan will not even meet the recently revised economic forecast of 0.1 percent for this year.