Pakistan's new Prime Minister Imran Khan in his first speech to the nation after his swearing-in as Prime Minister admitted that Pakistan's finances are in dire straits and it needs to take a loan to pay the interest on loans it had taken. Around the time of the elections, in late July, Pakistan's foreign currency reserves rebounded to $10.3 billion from $9 billion, sparking speculation that China had extended financial assistance. Pakistan's external debt has risen by 50% over the past three years, reaching nearly $100 billion. Around 30% of that is owed to China. And without a bold fiscal reform plan, Pakistan will have less financial room for maneuver over the next two years, with its debt-servicing costs forecast to rise to nearly 50% of tax revenues from 30% now. While Pakistan has said it might turn to the IMF for a loan, the US has cautioned the IMF against using US funds for Chinese projects.
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