Pakistani Prime Minister Imran Khan’s “peace missive” suggesting PM Narendra Modi as the best bet is an outreach to the Western audience and big powers amid the precarious state of the country’s economy.
The Imran Khan government faces an uphill task in repairing the economy, with the country fearing being blacklisted by inter-governmental institution Financial Action Task Force (FATF) and finding it difficult to seek IMF bailout amid opposition from US lawmakers.
Financial support from traditional partners in Gulf has not been adequate to tide over economic crisis and balance of payments issue. Khan is making desperate attempts at image makeover in order to gain Western support to boost the economy even as China remains a close political and economic ally.
The International Monetary Fund (IMF) on Tuesday revised downwards its growth projections for Pakistan to 2.8 per cent for 2018-19 and 2.9 per cent for 2019-20. It cited “ongoing macroeconomic adjustment challenges” for its revised projections. “In Pakistan, in the absence of further adjustment policies, growth is projected to remain subdued at about 2.5 percent, with continued external and fiscal imbalances weighing on confidence.”
Pakistan’s rising fuel import bill following a devaluation of the Pakistani rupee and a downgrading in the sovereign rating by rating agencies have only added to its economic woes. FATF Grey Listing has prevented fresh flow of foreign funds as well as investments.
Pakistan’s foreign exchange reserves stood at more than $8 billion in February 2019 — just enough to service around two months of imports — as against over $12 billion just a year ago. The Pakistani rupee has also depreciated nearly 40 per cent against the dollar in the last two years.
The IMF said the expected budget deficit of the country is likely to be 7.2 percent, which is feared to increase next year. It said inflation in Pakistan would remain 7.6 percent, despite a projected 6 percent.
“It has been almost eight months since PTI came to power, and during this period the country’s economy has started crumbling, with inflation now at 9.41% and the rupee at a historic low against the US dollar. From petroleum products to food items, and from utility bills for electricity and gas to medicine, everything is subject to price increases because of the growing inflation rate, while the government is unable to attract any international investment and has failed miserably in creating business opportunities within the country,” wrote Pakistan-based Imad Zafar earlier this month in an article titled ‘Pakistan’s self-created economic turmoil’ in the Asia Times.