Pakistan needs $12 billion just to stay afloat, admits incoming finance minister

Asad Umar has denied his country has a Chinese debt problem but admits a bailout package is the urgent need of the hour.

Reuters Photo

Celebrations are rather muted for Asad Umar despite an imminent rise in political stature in Pakistan. The incoming finance minister of the country has said that Pakistan would need $12 billion in loans - at the very least - just to keep itself afloat.

Umar will have his task cut out.

Inheriting an economy in absolute shambles would be a massive challenge for Imran Khan and his cabinet ministers and all eyes would primarily be on what Umar does. The former head of Pakistan's Engro Corporation said a recent interview to Bloomberg that the loan amount urgently needed would be in the range of $10 billion and $12 billion. He went on to say that the country would need something extra from thereon to move away from the edge. "The decision needs to be taken in the next six weeks, the further you go forward the more difficult, the more expensive the options become," he is quoted as saying.

Pakistan's economy is indeed crumbling.

Rising imports and the volatile oil markets have greatly hurt the country, especially because its exports - mainly textiles - have only seen a trickle of a rise. Relations with the United States are sour and there are accusations of China following an opaque policy towards OBOR in Pakistan.

It is most likely that once Imran Khan and his ministers take oath on August 11, Pakistan would rush to the International Monetary Fund (IMF) for a bailout package that could be to the tune of $12 billion. The last time the country turned towards IMF was in 2013 when it got a $6.6 billion loan for a crisis of lesser proportions than the one existing now. This time, the US could act as a roadblock as well, further complicating the matter.

That China and Saudi Arabia could help is being predicted but loans from either or both could come with riders. But Umar in his interview negated any fears when it comes to Beijing, stating that 'Pakistan has no Chinese debt problem.'

How his PM goes about his plans of establishing a welfare state - as per his pre-poll promise - remains a mystery as the current economic situation is far from conducive for such herocis.