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The next government of Pakistan, to be born from the legislative elections scheduled for July 25, will have to deal with a degraded economy that could force him to seek help from the IMF, according to badysts.
The central bank has had to tap into the country's foreign exchange reserves and devalue its currency, the rupee, to cover a growing trade deficit, and whoever wins the vote will only have "limited time" to act , warned the rating agency Fitch at the beginning of the month.
Taken together, the economic challenges facing the new legislature are "terrible," said badyst Ashfaque Hasan Khan, a former adviser to the government. 19659002] "There is a consensus among independent economists that Pakistan's economy has never been in such bad shape as today, so the next government will inherit a completely shattered economy," he said. he pointed out, besides the deficits, the problems of job creation, governance and corruption, as well as insufficient growth.
Falling for years by Islamist insurgent violence, Pakistan, a country ofMore than 207 million people are growing, trying to consolidate an unstable economy and overcome a chronic energy crisis.
Confidence has risen in recent years as security improves in recent years. the country, pushing the IMF to say last October that the country had emerged from the crisis after having benefited from a bailout program in 2013.
The outgoing government of former Prime Minister Nawaz Sharif tried to remedy power cuts, to improve the outdated infrastructures that slowed down its development and to carry out reforms.
China contributed to the development of the country through the mega-infrastructure project called China-Pakistan Economic Corridor (CPEC), which must connect the two neighbors.
Pakistan's GDP grew by 5.8 percent in 2017-18, its fastest pace since 2005, albeit below official forecasts (6 percent). Public debt stands at about 70% of GDP.
But deficits are widening: Pakistan traditionally imports a lot but its purchases have increased because of the need for CPEC-related building materials and rising prices.
Its meager exports, like textiles, have suffered from competition from other countries. The sending of foreign currency by expatriate Pakistanis was not enough to make up the difference.
The interim government set up before the elections promised to fight the balance of payments deficit by resorting to the country's foreign exchange reserves. countries, which rapidly began to decline.
According to the Bank of Pakistan, they rose from $ 16.1 billion on April 17 to $ 9.6 billion on June 22.
"We must finance this trade deficit by $ 25 billion from our reserves, there is no other option, "said Acting Finance Minister Shamshad Akhtar. "This is one of the main problems facing our government."
– Mysterious Contracts –
This statement came just hours after the announcement of a rupee devaluation of 3.7% , the third since December, which represents a cumulative decline of 13% against the dollar, according to Fitch.
What alleviate some of the pressure on reserves, notes the agency, but "at this stage their magnitude n ' was not enough to prevent a deterioration of external finances faster than expected. "
For badyst Salman Shah, Islamabad will have to seek help from friendly countries or the IMF. According to him, the government will not be able to do without "deep and wide-ranging reforms in all sectors related to the economy", even if it considers that projects like the CPEC are bringing hope.
But some aspects of the CPEC are also uncomfortable: the terms of the gigantic contracts between the Chinese and Pakistani governments are mysterious, fueling concern over Pakistan's ability to repay loans.
Fitch predicts that the budget deficit could rise to 6% this year and warns that "the government is increasingly dependent on external borrowing, particularly from Chinese financial institutions".
The IMF is already Pakistan, with a loan of 11.3 billion USD in 2008, followed by another of 6.7 billion USD in 2013.
In 2016, the Fund estimated that the country was out of the crisis, before noting a year later that he faced "significant short-term challenges."
"Each year, 2 million people enter the labor market and to absorb them all, the economy is expected to grow on average 7 % per year ", otherwise many will remain on the wall, adds the badyst Mr. Kahn.
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