+ A
A -
Reuters
ISLAMABAD
Whoever wins next week's election in Pakistan will have to urgently resolve a currency crisis that threatens to put the brakes on the fast-growing economy, with the most likely solution being another bailout from the International Monetary Fund (IMF).
Pakistan's economy expanded at 5.8 percent in the last fiscal year, its quickest pace in 13 years, but the rupee currency has been devalued four times since December. Interest rates have been raised three times.
A sharp increase in oil prices - Pakistan imports about 80 percent of oil needs - has contributed to a current account deficit that widened 43 percent to $18 billion in the fiscal year that ended June 30. The central bank's defence of an overvalued rupee has led to foreign reserves plunging to just over $9 billion last week from $16.4 billion in May 2017.
"Nobody thinks there is another option but to go to the IMF,"said Ehsan Malik, chief executive of the Pakistan Business Council, a body representing about 60 major Pakistani businesses. Pakistan is forecasting economic expansion to hit 6.2 percent in the financial year ending June 2019, but the IMF sees it stumbling to 4.7 percent.
The deterioration in macroeconomic fundamentals has dented the economic credentials of the staunchly pro-business party of jailed former premier Nawaz Sharif, providing ammunition to rival Imran Khan, a former cricketer whose populist pitch includes plans for an"Islamic welfare state".
The two parties are running neck and neck in opinion polls.
