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Pakistan has turned to China and Saudi Arabia for financial assistance as it confronts an external account deficit for the year 2018-19.
The country has elected to do this rather than relying on International Monetary Funds (IMF)
The country’s advisor on Finance confirmed last week that the government has contacted prosperous brother countries for assistance.
Pakistan was due to repay US$6 billion in foreign loans by the 31st of March this year, which it has been unable to do.
Reports read that Imran Khan’s Pakistan Tehrik-e-Insaaf (PTI) blames Nawaz Sharif’s Pakistan Muslim League-Nawaz (PML-N) for the crisis the country is in.
The PTI’s holds PML-N’s former finance minister Ishaq Dar, is held responsible for putting the country into a debt trap by contracting a $40 billion external loan package.
An IMF bailout is not the preferred option at the moment as that might put the $ 60 billion China-Pakistan Economic Corridor (CPEC) into jeopardy a Finance Ministry official is reported to have said.
He was confident, however, that the needed loan of US $ 8 billion would be provided by China. Pakistan also hopes that Saudi Arabia would deliver oil on a deferred payment basis.
The catch today is that the country is also facing a political crisis with former Prime Minister Nawaz Sharif (who had developed close ties with the Saudi monarchy) barred for life for money laundering.
The judiciary and military establishment are alert do not appear to be too worried by the situation, but uncertainty in the country prevails and, political analysts fear that if these matters are not urgently addressed, problems could arise.
The cheering news for the country is that economists are of the opinion that Pakistan has more than sufficient reserves to avoid sliding into any kind of immediate default.