Pakistan Investors Brace For Thunderbolt As Imran Khan Tests Army
NDTV
Heightened tensions after Imran Khan's arrest last week may push an International Monetary Fund's $6.7 billion bailout further out of reach, with bond managers staring at the specter of a sovereign default.
Pakistan investors are bracing for a sudden jolt as former premier Imran Khan's showdown with the powerful military, and the government, reaches a tipping point.
Warnings of a massive drop in the rupee are flaring up, with some analysts forecasting another 20% decline is possible. Heightened tensions after Khan's arrest last week may push an International Monetary Fund's $6.7 billion bailout further out of reach, with bond managers staring at the specter of a sovereign default.
Khan, who was later released by the top court, is challenging the military's influence in politics and pushing the government to hold early elections. Risks are rapidly increasing for investors as the upheaval is a potent reminder of the nation's history with three coups since 1958, while an apparent assassination attempt on the 70-year-old politician in November underscored that violence may intensify.
"To be invested in Pakistan means you should be prepared for bigger risks," said Edwin Gutierrez, head of emerging-market sovereign debt at abrdn plc, a long-time investor in the nation. "Black swans are a bigger probability."
