The IMF recently stated that Pakistan’s economy is in a dire situation and one of the greatest challenges for the new government would be to save the country from an imminent financial crisis. To shield Pakistan’s dwindling economy, Imran Khan will have no choice but to seek foreign help for an economic bailout, which will either be the International Monetary Fund (IMF) or China. Will Imran Khan opt for Chinese Debt Trap or IMF’s Austere Measures?
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Experts feel that neither of these choices would solve the financial woes of Pakistan in the long run, even if they might offer a certain reprieve for a while. If Pakistan opts for the Chinese funding then Pakistan gets further stuck in the debt trap.
This debt trap of increased lending from Beijing will worsen Pakistan’s current account. Pakistan has already sought loans worth $ 62 billion from China under the China Pakistan Economic Corridor (CPEC).
On the other hand, if Pakistan reaches out to the International Monetary Fund for a bailout package, the strict austerity measures will hinder the economic growth of Pakistan. Clearly, Pakistan is staring at an economic disaster and there might be no respite.
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Pakistan so has been at the receiving end of 21 bailout programs in all with the recent one lasting two years ago. The US has already warned Pakistan that the IMF’s bailout should not be in any sense used to make payments to Chinese lenders.
The foreign exchange reserves have plunged to 4-year low and this has badly hurt Pakistan’s currency. The Rupee is constantly degrading in contrast to dollar and Pakistan may soon have no money at all to settle import bills. Imran Khan needs to make a choice after he assumes the PM’s office and he needs to make a choice real soon. Can Imran Khan find a way out to rescue Pakistan from the horrific economic chaos?