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The next Pakistani government, to be elected in the July 25 elections, is increasingly concerned about the balance of payments crisis, and is expected to seek its second IMF bailout in five years, according to reports. analysts. the depletion of foreign exchange reserves and the devaluation of the currency in an attempt to fill a gaping trade gap, and the winners of the July 25 elections will have "only a limited time" to act, has said the agency Fitch on July 2.
The economic challenges are "horrible," said Dr. Ashfaq Hassan, an analyst and former Pakistani government financial advisor.
"The most important will be to protect Pakistan's balance of payments, build Pakistan's foreign exchange reserves and Pakistan – a fast-growing country of some 207 million people – has struggled for years against Islamist militancy and has fought to put his fragile economy back on track and put an end to an economic crisis – a chronic energy crisis that has paralyzed the industry.
Confidence has been slightly increased in recent years, improving security and the IMF asserting last October that the country had emerged from the crisis after completing its bailout program after 2013.
the previous government of the year. Former Prime Minister Nawaz Sharif attempted to alleviate power shortages, implement structural reforms and improve the crunchy infrastructure that was impeding growth.
China has also made progress on an ambitious multibillion dollar infrastructure project. Economic Corridor of Pakistan (CPEC) – connecting its western province of Xinjiang to the Arabian Sea via Pakistan.
But growth was not as fast as many had hoped. The economy grew 5.8% in 2017-18, the highest rate since 2005, but still lacks a government target of 0.2%.
Public debt currently stands at about 70% of GDP
. Pakistan, which has historically relied on imports, has increased its purchases of materials to help build CPEC projects while undergoing high oil prices.
Its meager exports such as textiles were hit by cheaper Chinese goods. the steps. In the midst of stability fears, the interim government committed in June to curb the current account deficit with rapidly declining foreign exchange reserves.
According to the State Bank of Pakistan, the country's reserves have fallen. "We have to finance this $ 25 billion gap in the trade deficit by depleting our reserves, there is no other option," Finance Minister Shamshad Akhtar said last month. At a press conference,
"This is a major concern for our government."
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The announcement comes hours after the central bank devalued the rupee by 3.7%, the third devaluation According to Fitch, the agency said the move had lightened somewhat the pressure on the reserves, but that "their magnitude has not been enough to prevent economic analysts, Salman Shah, told AFP that Islamabad should look for the right price." assisting friendly countries or negotiating a new IMF rescue plan
. very difficult for the next government to face all these challenges … it should undertake deep and profound reforms in all sectors related to the economy ", he said.
But Shah, The government advisor also said that although the task was huge, projects such as the CPEC meant that there was hope for the long term.
Yet there is a The terms of the CPEC's massive agreements are shrouded in secrecy, which raises concerns about Pakistan's ability to repay Beijing's investment.
could not immediately confirm that Pakistan was looking for Chinese loans to repay its debts The Washington-based IMF has bailed out Pakistan before, with a $ 11.3 billion loan in 2008 to stave off a crisis of the balance payments in a market abandoned by Islamabad in 2011.
In 2016, the IMF said that Pakistan had emerged from the crisis, although a review, a year later, said it was facing " significant short-term challenges. "
Fitch predicts the budget deficit could reach 6 The government is increasingly dependent on external borrowing – especially Chinese political banks. "
The loan will help," said the agency. – but with the increase in debt service payments that will begin in 2019, there is little room for the next government to manage.
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