*ISLAMABAD – Pakistan’s next government, to be chosen in a July 25election, faces growing fears of a balance of payments crisis withspeculation it will have to seek its second IMF bailout in five years,analysts say.*

The central bank is running down its foreign reserves and devaluing thecurrency in a bid to bridge a yawning trade deficit, and the winners of theJuly 25 election will have “limited time” to act, Fitch ratings agency saidon July 2.

Together, the economic challenges are “horrendous”, said Ashfaque HasanKhan, an analyst and former financial advisor to the Pakistan government.

“The most important (challenge) will be how to protect Pakistan’s balanceof payments, how to build Pakistan’s foreign exchange reserves and how tofix its fiscal position,” he told *AFP*.

Plagued for years by Islamist militancy, Pakistan — a rapidly growingcountry of some 207 million people — has been battling to get its shakyeconomy back on track and end a years-long chronic energy crisis that hascrippled industry.

Confidence had grown slightly in recent years, with security improving andthe IMF claiming in October last year that the country had emerged fromcrisis after completing its post-2013 bailout programme.

The previous government of former PM Nawaz Sharif attempted to ease thepower shortages, enact structural reforms and improve the creakyinfrastructure, which had hampered growth.

China has also made progress on an ambitious multi-billion dollarinfrastructure project — the China-Pakistan Economic Corridor (CPEC) —linking its western province of Xinjiang to the Arabian Sea via Pakistan.

But growth has not been as fast as many hoped. The economy grew by 5.8%during 2017-18, its fastest since 2005 but still missing a governmenttarget by 0.2%.

Public debt now sits at roughly 70% of GDP.

And the deficit is widening. Pakistan, which has historically relied onimports, has increased its procurement of materials to help build CPECprojects while also suffering from higher oil prices.

Its meagre exports such as textiles, meanwhile, have been hit as cheaperChinese-produced goods flood the markets. Foreign remittances have not beenenough to plug the gap.

Amid stability fears the caretaker government pledged in June to stem thecurrent account deficit with rapidly dwindling foreign reserves.

According to the State Bank of Pakistan, the country’s reserves plunged to$9.6 billion on June 22 from $16 billion on April 17.

“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, installed last month, told a press conference.

“This is a major worry which our government is facing.”