- The Washington Times - Thursday, August 9, 2018

For all the other problems Pakistan Prime Minister-designate Imran Khan faces — from relations with India, Afghanistan and the U.S. to dealing with terror groups inside the country, fixing the economy that will be his unquestioned top priority and biggest early test.

For the onetime cricket star whose electoral victory last month broke the hold on power of Pakistan’s traditional political dynasties, the economic challenges will be substantial, Pakistan watchers say.

Mr. Khan and his Tehreek-e-Insaf (PTI) party will not only inherit a trade deficit of $37.7 billion and dwindling foreign reserves, but also the plummeting rupee, which has decreased in value by 15 percent in the past seven months.

In order to ease the country’s economic crisis, experts say Mr. Khan and the PTI will have little recourse other than to request a bailout from the International Monetary Fund (IMF) — although that could put Islamabad on a collision course with the Trump administration.

Former Finance Minister Salman Shah told The Diplomat newspaper that getting through the government’s current cash crunch may give Mr. Khan and the economy some breathing space to tackle bigger reforms.

“Even though we are getting [financial] support from China and Saudi Arabia, the IMF program is important for Pakistan, because it will help create the discipline that the country requires and will help govern the economic institutions in the country,” Mr. Shah said.

Seeking to move up the international development ladder, Pakistan has accepted tens of billions of dollars in infrastructure lending from Beijing, a major part of Chinese President Xi Jinping’s so-called Belt and Road Initiative, for new bridges, roads and ports. The investments may pay off in the long run but have left the Trump administration wary that any new IMF money given to Islamabad will be used to bail out Chinese countries carrying out the Belt and Road contracts.

Secretary of State Mike Pompeo last month at an Asian summit in Singapore warned that the U.S. “will be watching” closely if Pakistan applies to the IMF for new funds.

Pakistan has averaged 5 percent growth in recent years, but is looking to accelerate the pace to ease investor concerns, improve the government’s finances and meet the soaring expectations of ordinary Pakistani voters given some of Mr. Khan’s campaign promises.

Without a new infusion of cash, from the IMF or another source, “the situation is certainly not good,” Mohammed Sohail, chief executive of Karachi-based brokerage firm Topline Management, recently told The New York Times. “We could see growth tumbling, interest rates increasing, inflation.”

But analysts also caution that IMF financing may come with restrictive conditions that clash with Mr. Khan’s campaign promises to create an “Islamic welfare state” with an improved safety net for poor and rural voters.

A panel of Pakistan experts organized by the Hudson Institute listed a series of daunting challenges facing Mr. Khan’s coalition government in the wake of the July 25 general election victory. Just getting the voters and opposition parties to accept the election results is proving a challenge, said Mohammad Taqi, who teaches at the University of Florida.

“This is a tainted election. The legitimacy of this parliament actually comes from the opposition accepting the results, albeit under protest,” he said. “If some of these big concerns such as the election commission and how they report results are not addressed, then there is always the potential for street protests which would create a bigger legitimacy in government issue.”

Mr. Khan is expected to be sworn as prime minister on Saturday.


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