Fears grow over Pak’s eco woes ahead of polls

Fears mounted over Pakistan's economic stability before elections this summer as the caretaker government pledged on Tuesday to stem the current account deficit by using rapidly dwindling foreign currency reserves.

There is growing speculation that the country will have to seek a loan package from the International Monetary Fund following the elections, for the second time since 2013, amid fears of a balance of payments crisis.

"We have to finance this gap of the trade deficit of $25 billion by depleting our reserves. There is no other option," caretaker Finance Minister Shamshad Akhtar told a press conference.

"This is a major worry which our government is facing." The announcement came hours after the central bank devalued the rupee by 3.7 per cent, the third devaluation since December.

A caretaker government was installed last week as the country prepares to head to the polls in late July, in what would be only the second democratic transfer of power in Pakistan's 70year history.

The country relies heavily on imports and has struggled for decades to increase exports, with chronic power shortages and creaky infrastructure hampering growth. It is also saddled with a heavy public debt -- 70 per cent of GDP, according to Akhtar -along with a yawning fiscal deficit.

The economy grew by 5.8 per cent during 2017-18, missing a government target by two per cent, according to documents from the finance ministry.