Pakistan's foreign currency reserves are so depleted it has only enough to pay for roughly three weeks of imports.
These are just the latest shocks amid months of crisis as endemic government corruption, depleted foreign reserves and crippling debt have sent Pakistan's economy spiraling.
International Monetary Fund officials landed in Islamabad on Tuesday for make-or-break talks with the Pakistani government. The goal of the talks? Unlocking desperately-needed funds from a $7 billion bailout package. Pakistani Prime Minister Shehbaz Sharif refused to make such changes for months, fearing popular backlash.
"The country's military establishment continues to corner a disproportionate share of resources for itself, at the expense of ordinary citizens," he said, explaining that in 2022, as Pakistan cut spending on areas like infrastructure and education, military spending ballooned by 11%. "Mired in political, military, feudal corruption, Pakistan has now existed as a state that only survives due to the largesse of the Saudis, China, UAE and the U.S. in that order," he said. "But finally its patrons have also run out of patience due to lack of transparency of the impact of their actual donations."
That combined with the already existing economic problems and the enduring impact of Covid-19 led the World Bank in early January to lower the country's growth projections from 4% last June to 2% for 2023, citing "precarious economic situation, low foreign exchange reserves and large fiscal and current account deficits" as key reasons.Pakistan is also close to China – and deeply in its debt. More than 30% of Pakistan's total foreign debt is owed to China, according to the IMF.
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