Hit by a political turmoil and nationwide floods in quick succession, Pakistan lost as much as $30 billion, and now inflation is at a 58-year-old high. Pakistan's external debt jumped by as much as 38 per cent towards the end of January to surge past $213 billion, leaving it desperate for an IMF bailout. It will have to halt debt repayment entirely if the International Monetary Fund refuses to provide a loan to save the crumbling economy.
China holds the key
With Chinese lenders holding 30 per cent of Pakistan's external debt, the Bank of America has pitched China as a potential saviour for its crisis-hit ally. With tough negotiations going on, Pakistan faces uncertainty about securing $1 billion out of a $6.5 billion bailout package from the IMF. Till any relief comes through, Pakistanis are struggling with higher taxes, increasing energy costs and a surge in interest rates.
Time running out for Pakistan
Despite timelines being missed time and again, Pakistan's Finance Secretary is reassuring the country that a deal will be finalised with IMF in a matter of days. As $4 billion of the total debt will be rolled over, Pakistan still needs to clear $3 billion by June. A relief on a loan from China has already given a breather to Pakistan, while it still remains buried deep under a debt pile.
With the Pakistani Rupee losing 20 per cent of its value this year alone, a timely IMF loan is the only hope to prevent an economic collapse.
