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Fears grow over Pakistan's economic woes ahead of elections

AFP  |  Islamabad 

Fears mounted over Pakistan's economic stability before elections this summer as the caretaker government pledged today to stem the deficit by using rapidly dwindling foreign currency reserves.

There is growing speculation that the country will have to seek a loan package from the following the elections, for the second time since 2013, amid fears of a balance of payments crisis.

"We have to finance this gap of the trade deficit of $25 billion by depleting our reserves. There is no other option," told a press conference.

"This is a major worry which our government is facing." The announcement came hours after the central devalued the rupee by 3.7 per cent, the third devaluation since December.

A caretaker government was installed last week as the country prepares to head to the polls in late July, in what would be only the second democratic transfer of power in Pakistan's 70-year history.

The country relies heavily on imports and has struggled for decades to increase exports, with chronic power shortages and hampering growth. It is also saddled with a heavy public debt -- 70 per cent of GDP, according to Akhtar -- along with a yawning fiscal deficit.

The grew by 5.8 per cent during 2017-18, missing a government target by two per cent, according to documents from the

Pakistan, plagued for years by a bloody homegrown insurgency, has been battling to get its shaky back on track and end the

Confidence has grown slightly in recent years, with security improving and the IMF claiming in October that the country has emerged from crisis after completing the bailout programme.

The growth in GDP comes amid structural reforms, an improved and China's ambitious multi-billion dollar infrastructure project -- the China-Economic Corridor -- linking its western province of to the via

However fears remain about Pakistan's ability to repay the Chinese loans, with much of their terms shrouded in secrecy.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Tue, June 12 2018. 19:25 IST