Fresh off his election win earlier this year, Prime Minister Imran Khan is desperately trying to keep Pakistan’s economy afloat.The country’s foreign reserves are dangerous low at $8 billion, which is enough to pay for just two months of imports. The rupee has also plunged, losing approximately 25% of its value compared to December of last year.
But perhaps most alarming is Pakistan’s current account deficit, which continues to widen and is expected to hit $18 billion for fiscal year 2018, or around 5.9% of GDP going by IMF estimates.
Islamabad turned to the IMF for help earlier this month, asking for around $7 billion in assistance. If approved, it would be the largest of the 13 bailouts Pakistan has requested from the international fund over the past 30 years.
Saudi Arabia has also stepped in to help. The Saudi government approved a support package worth at least $6 billion on Tuesday. The package includes a year-long $3 billion deposit for balance-of-payment support and a deferment of payments owed for oil imports up to the remaining $3 billion.
The lifeline was secured at the “Davos of the Desert” conference, where Prime Minister Khan was quoted as saying Pakistan was “desperate” to secure new loans. His attendance struck a contrast to the slate of leaders and executives who are boycotting the conference, and Khan’s show of loyalty appears to have been rewarded.
The Saudis are believed to have turned down previous requests for support, prompting Islamabad to approach the IMF.
China extended a new $2 billion loan in August, just days after Imran Khan was elected prime minister. The country has been trapped in a deepening economic crisis for most of this year.
