ISLAMABAD: Fears mounted over Pakistan´s economic stability beforeelections this summer as the caretaker government pledged Tuesday to stemthe current account deficit by using rapidly dwindling foreign currencyreserves.
There is growing speculation that the country will have to seek a loanpackage from the International Monetary Fund following the elections, forthe second time since 2013, amid fears of a balance of payments crisis.link#_>
“We have to finance this gap of the trade deficit of $25 billion bydepleting our reserves. There is no other option,” caretaker FinanceMinister Shamshad Akhtar told a press conference.
“This is a major worry which our government is facing.”
The announcement came hours after the central bank devalued the rupee by3.7 percent, the third devaluation since December.
A caretaker government was installed last week as the country prepares tohead to the polls in late July, in what would be only the second democratictransfer of power in Pakistan´s 70-year history.
The country relies heavily on imports and has struggled for decades toincrease exports, with chronic power shortages and creaky infrastructurehampering growth.
It is also saddled with a heavy public debt — 70 percent of GDP, accordingto Akhtar — along with a yawning fiscal deficit.
The economy grew by 5.8 percent during 2017-18, missing a government targetby two percent, according to documents from the finance ministry.
Pakistan, plagued for years by a bloody homegrown Taliban insurgency, hasbeen battling to get its shaky economy back on track and end the energycrisis crippling industry.
Confidence has grown slightly in recent years, with security improving andthe IMF claiming in October that the country has emerged from crisis aftercompleting the bailout programme.
The growth in GDP comes amid structural reforms, an improved energy sectorand China´s ambitious multi-billion dollar infrastructure project — theChina-Pakistan Economic Corridor — linking its western province ofXinjiang to the Arabian Sea via Pakistan.
However fears remain about Pakistan´s ability to repay the Chinese loans,with much of their terms shrouded in secrecy. – APP/AFP