Breakingviews – Imran Khan's vision in Pakistan is out of reach

MUMBAI (Reuters Breakingviews) – Imran Khan's economic vision for Pakistan is alluring. The party backed by the country's former cricket hero and possibly new prime minister won the most votes in Wednesday's elections. Khan wants to fight corruption, reform government spending and improve the lives of the poor. Given the demands that are likely to come with a $ 300 billion bailout of the economy, it's fanciful.

Khan's ambitions echo those of Pakistan's biggest neighbors. Chinese President Xi Jinping led an aggressive anti-corruption campaign and Indian Narendra Modi was elected with a similar commitment. Khan has a weaker mandate, needs to form a coalition and has fewer financial resources at his disposal.

Indeed, Pakistan is heading for a new financial crisis. The World Bank sees the economy growing at only 5% during the current fiscal year. Foreign exchange reserves cover barely two months of imports in a country dependent on foreign energy supplies. The central bank raised its interest rates by 175 basis points this year and the rupee has been devalued four times since December.

A plan to multiply by more than four social protection expenditures will probably not be implemented if Pakistan seeks help from the International Monetary Fund. The country has exploited the fund more than 10 times in its history. Capital Economics estimates that any support program will require the rupee to fall further by 10% by the end of the year and interest rates to rise by 100 basis points. Rival potential savior China is partly responsible for the current situation of the country. The large infrastructure projects that are part of its Belt and Road program have pushed Pakistani imports up.

Even though Khan's hands were not financially linked, he would still be politically constrained by the army, which is widely believed to have helped the new leader take power in a process election criticized by observers from the European Union and the United States. . It is hard to see how he can keep the army happy while reducing the defense budget of the nuclear state and finding a pitch of agreement with its neighbors. Khan's ambitions for Pakistan seem out of reach.