PAKISTAN Islamabad mired in debt (not just floods)

Added to more than 1,500 dead, the floods have left damage worth 30,000 million dollars. Loans from abroad are required to cover energy needs and import food. The problem of the debt of 30,000 million dollars with China. Imran Khan’s shadow over Shehbaz Sharif’s government.

Islamabad ( / Agencies) – The recent floods that left more than 1,500 dead and devastated entire areas of the country, will plunge Pakistan further into debt. Along with paying for imports of raw materials and food, compliance with the terms of debt with foreign creditors is the government’s main problem.

The national executive is facing the perfect storm. The local economy has been in trouble for years, and has often resorted to the help of international multilateral institutions. Pandemic, war in Ukraine and energy crisis have aggravated an already very difficult situation and the floods seem to have delivered the coup de grâce.

Pakistan finds its foreign reserves depleted, the local currency in free fall, and runaway inflation. Before the August floods, the central bank said 33.5 billion dollars in foreign loans were needed. Now much more will be needed: the first calculations show that the floods have caused damages of more than 30 billion dollars.

Despite aid from the International Monetary Fund, the country has foreign exchange reserves that cover only one month of imports. Analysts point out that the first thing that the weak government of Shehbaz Sharif must do is negotiate agreements to restructure the foreign debt.

One of the problems will be dealing with the Chinese, to whom Islamabad owes $30 billion. And at the same time Sharif is facing political pressure from his predecessor Imran Khan, who has not lost popularity in the country.