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Default Threat Reaches Pakistan as Political Crisis Deepens

  • Officials want $3 billion from the IMF to fill funding gaps
  • Political instability and fuel subsidies could derail talks
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WATCH: Murtaza Syed, Acting Governor at the State Bank of Pakistan, discusses the outlook for monetary policy and economic growth.Source: Bloomberg
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Soaring inflation. Squabbles over fuel prices. A fractious political environment. For months, Pakistan has struggled to keep its economy afloat, raising the prospect that one of the world’s most populous nations could soon follow Sri Lanka in a wave of potential global defaults.

Investors are getting nervous. Without a bailout from the International Monetary Fund, Pakistan may default for the second time in its history. As talks with the IMF conclude Wednesday in Doha, officials acknowledge that winning a loan from the multilateral lender might involve trade-offs, including the politically tough decision of raising fuel prices.