Another Emerging-Market Crisis May Be Brewing in Asia
Pakistan has agreed its 13th IMF bailout since the 1980s. Steering a recovery may be a tougher task than winning the world cup for cricketer-turned-PM Imran Khan.
One way to lift the economy.
Photographer: David Rogers/Getty Images
Pakistan is flirting with a textbook emerging-market crisis. An unsustainable investment boom has ended. The central bank has raised interest rates to squeeze a current account gap. Growth has collapsed to a nine-year low; youth unemployment is in double digits; and inflation is getting there. Government revenues are stalling.
Getting Islamabad out of its jam is once again the job of the International Monetary Fund. The IMF has put together the country’s 13th bailout since the late 1980s, but it doesn’t want its $6 billion of rescue funds to be used to pay Chinese loans for Belt and Road projects. The fund’s suggestion to let the currency float freely could extend its 30% decline against the dollar since December 2017.