Pakistan Teeters on the Brink of Economic Crisis

PakistanRupee, cc Abbas dhothar , modified,


Behind the impressive government growth projections and official speeches lauding the China-Pakistan Economic Corridor (CPEC) lies an uncomfortable reality: Pakistan’s economy is teetering on the brink of crisis.  Debt servicing, a yawning balance of payments, and longstanding structural hurdles continue to chip away at the government’s fiscal position, and stand-in prime minister Shahid Khaqan Abbasi is desperate to keep an even keel long enough for his PML-N party to contest upcoming elections in July. So far he has succeeded thanks to over $5 billion in loans from the Chinese government and Chinese banks, money that has largely been put toward debt servicing and shoring up Pakistan’s paltry foreign reserves. With another IMF bailout almost assured after the elections, South Asia’s second-largest economy and nuclear power now finds itself locked in a cycle of debt servitude, one that won’t be broken for the foreseeable future.


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