Islamabad [Pakistan], Sep 10 (ANI): In a bid to secure its plunging economy, Pakistan has been desperately trying to garner more investments and bailout packages from various entities. The huge debt pile-up, however, would gradually force a slowdown in new projects that may push the country into a deeper economic crisis.
Recently, the International Monetary Fund (IMF) has decided to send its team this month for suggesting ways and means to curtail the yawning budget deficit being faced by cash-strapped Pakistan.
Earlier in July, the global money-lender had approved a USD six billion loan to Pakistan, which is facing significant economic challenges in the backdrop of the country's large fiscal deficits and loose monetary policies. The IMF team will discuss fiscal issues with special focus to restrict target of primary deficit within the desired limits, according to Pakistani media reports.
In addition, Chinese Ambassador to Pakistan, Yao Jing, has also reportedly announced that Beijing is planning to invest USD one billion in development projects in Pakistan, especially the CPEC that connects Gwadar Port in Balochistan with China's Xinjiang province.
"Pakistan 'borrowed $16B from abroad in the 2018-19 fiscal year to avoid running out of foreign currency. 42% of that, or $6.7B, came from China. The government also approached IMF, which in July approved a $6B bailout," Jeff M. Smith, a research scholar from South Asia-Heritage Foundation, said on Twitter.
"The huge debt pile is forcing a slowdown in new projects," Smith added.
Previously, the IMF had pointed out that dull progress in structural progress continued to hamper investment and allowed "inefficient state-owned entities (SOEs) to linger and a large informal economy to expand".
Citing Pakistan's finance ministry's documents, Express Tribune reported that foreign loan disbursements between July 2018 and April 2019 of the current financial year showed loans for the Karachi Nuclear Power Plants, known as K2 and K3, and China SAFE deposits as part of federal debt obligations.
In addition, countries such as the UAE and Saudi Arabia have also given bailout packages to the cash-strapped country in a bid to tackle its ballooning balance-of-payments crisis.
The annual fiscal deficit of Pakistan rose to the highest in the last three decades at 8.9 per cent for the financial year 2018-19. The fiscal deficit is a difference between revenues and expenditures of the federal government.
Pakistan Prime Minister Imran Khan, who was elected on an anti-corruption plank and a pledge to end austerity measures, had vowed to improve the depleting economic situation of the cash-strapped country.
In fact, the opposite has happened. In reality, prices of gas and oil products and electricity in Pakistan have risen considerably, burning a hole in common man's pocket.
Pakistan had received the first tranche of the loan worth USD 991.4 million from the IMF in May. (ANI)