the fiscal deficit is In a particularly trying moment of an interview on BBC’s Hard Talk last week, Pakistan’s Finance Minister Asad Umar seemed to lose his temper when asked about the U.S.’s statements on curbing the International Monetary Fund (IMF)’s loans, given Pakistan’s debt to China.“We will worry about our debt problem, let Mr. [Mike] Pompeo worry about his debt problem with China,” Mr. Umar snapped at a reference to the Secretary of State’s comments that no bailout dollars from the IMF should be used to service Pakistan’s debt to China.The U.S.’s pressure on Pakistan, including suspending about $3 billion in aid, is only one of several external factors that have bruised the country’s economy. In the past year, Pakistan’s growth has slowed, and is expected to slow further to 4.6% next year. The current account deficit remains a major concern and the Pakistani Rupee has lost about 32% of its value since January.
Faced with an all-round bleak outlook, Pakistan’s establishments, both civilian and military, appear to be exploring all their options. The outreach to India with the Kartarpur corridor initiative and the push to revive the SAARC summit invitation to Prime Minister Narendra Modi, for example, were driven as much by a desire to look conciliatory as by the economic challenges.
Speaking to Indian journalists at the Foreign Office in Islamabad, Foreign Minister Shah Mehmood Qureshi himself laid the challenges out. “Let me point out why there’s support for the entire [engagement process with India]: because we have come on a mandate to fix the economy. We have inherited a difficult economic situation where close to 6.6%, the trade deficit was historic and growth rate is abysmal. So the challenge… is the economy.”