May 31, 2013
With foreign reserves diminishing fast, Pakistan is on the brink of an economic crisis that may force its new government to ask for an unpopular bailout from the International Monetary Fund requiring a sweeping overhaul of the country’s economy.
The troubles could inject a new element of instability into the nuclear-armed nation of 180 million people that Washington is relying on to combat Islamic militants at home and to help negotiate an end to the war in neighboring Afghanistan.
Pakistan’s foreign currency reserves stood at just $6.4 billion as of May 17, down from more than $14 billion two years ago. That is only enough to cover about 1.5 months’ worth of imports while the IMF considers adequate foreign reserves for any country enough to cover three months of imports.