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Blackouts and soaring prices: Pakistan's economy is on the brink - CNN
Feb 02, 2023 1 min, 10 secs
Pressure is growing on Prime Minister Shehbaz Sharif’s government to unlock billions of dollars in emergency financing from the International Monetary Fund, which sent a delegation to the country this week for talks.

These dynamics make interest payments on debt from foreign lenderseven more expensive and push the cost of importing goods higher still, requiring even bigger drawdowns in reserves that compound the distress.

The economic slowdown has weighed on demand for Pakistan’s exports, while a sharp rally in the value of the US dollar last year piled pressure on countries that import significant volumes of food and fuel.

While it forecasts that emerging market and developing economies will see a modest uptick in growth this year as the dollar comes offits highs, global inflation falls and China’s reopening spurs demand, the ability to manage debt loads remains a concern.

“The combination of high debt levels from the pandemic, lower growth and higher borrowing costs exacerbates the vulnerability of these economies, especially those with significant near-term dollar financing needs,” the IMF wrote in its world economic outlook this week.

But Farooq Tirmizi, the CEO of Elphinstone, a startup geared at Pakistani investors, said that even if the IMF program resumes, it won’t fix all the problems, since the main issues plaguing Pakistan are “not economic, but political, with a government in place that is not willing to make structural changes.”

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